nep-iue New Economics Papers
on Informal and Underground Economics
Issue of 2013‒08‒05
seven papers chosen by
Catalina Granda Carvajal
Universidad de Antioquia

  1. Redistribution and Tax Evasion: an Asymmetric Information Approach By Silvia Platoni; Francesco Timpano
  2. Economic Growth, Tax Evasion and Tax Monitoring Expenses: An Empirical Analysis in OECD Countries By Konstantinos Chatzimichael; Pantelis Kalaitzidakis; Vangelis Tzouvelekas
  3. Taxing Hard-to-Tax Markets By Marcelo Arbex; Enlinson Mattos; Laudo M. Ogura
  4. Why could Northern labor market flexibility save the eurozone? By Amélie Barbier-Gauchard; Francesco de Palma; Giuseppe Diana
  5. Urbanization and agglomeration benefits : gender differentiated impacts on enterprise creation in India's informal sector By Ghani, Ejaz; Kanbur, Ravi; O'Connell, Stephen D.
  6. Intra-Family Migration Decisions and Elderly Left Behind By Tobias Stoehr
  7. Le contrat de travail unique: quid pro quo ou simple quiproquo ? By Etienne Wasmer; Nicolas Lepage-Saucier; Juliette Schleich

  1. By: Silvia Platoni (DISCE, Università Cattolica); Francesco Timpano (DISCE, Università Cattolica)
    Abstract: The article studies the optimal redistribution system, achieved by direct taxation, indirect taxation and public provision of the pseudo-necessary good, when individuals, who differ in productivity, can take hidden actions (tax evasion by moral hazard) and have hidden information (tax evasion by adverse selection). It proves that any Government willing to effectively reallocate resources among individuals has to undertake measures against tax evasion, i.e. to establish tax evasion fines.
    Keywords: Redistribution; Tax Evasion; Asymmetric Information.
    JEL: H23 H42 H26 D82
    Date: 2013–07
  2. By: Konstantinos Chatzimichael (Dept of Economics, University of Crete, Greece); Pantelis Kalaitzidakis (Dept of Economics, University of Crete, Greece); Vangelis Tzouvelekas (Department of Economics, University of Crete, Greece)
    Abstract: Using Kalaitzidakis and Kalyvitis (2004) approach, we extent Roubini and Sala-i-Martin (1993) endogenous growth model to analyse empirically the relationship between economic growth, announced tax rate and tax monitoring expenses using data from OECD countries during the 1999-2007 period. Our results indicate that high announced tax rates above the elasticity of public capital and excess expenses on tax auditing as means of reducing tax evasion are not effective deepening rather recession.
    Keywords: announced tax rate, tax monitoring, tax evasion, GDP growth
    JEL: H21 H26 H54
    Date: 2013–06–29
  3. By: Marcelo Arbex (Department of Economics, University of Windsor); Enlinson Mattos (São Paulo School of Economics, Getulio Vargas Foundation); Laudo M. Ogura (Economics Department, Grand Valley State University)
    Abstract: Tax enforcement costs constrain the government?s ability to observe economic transactions, giving rise to hard-to-tax (HTT) markets. In these markets transactions are untaxed and consumers are better off than in taxed markets. This paper studies a novel approach to combat evasion in HTT markets: consumer auditing, which rewards consumers for requesting transaction receipts. We develop a Hotelling-type spatial model of sales taxation to analyze the welfare and distributional effects of the implementation of this policy. We find that consumer auditing allows for a lower tax rate and greater provision of the public good in the economy. We show that this policy not only can enhance welfare, but also equalize utilities of consumers across markets.
    Keywords: taxation; hard-to-tax; tax evasion.
    JEL: H1 H21 H26
    Date: 2013–08
  4. By: Amélie Barbier-Gauchard; Francesco de Palma; Giuseppe Diana (LaRGE Research Center, Université de Strasbourg)
    Abstract: We consider a heterogeneous labor market in a two-country monetary union. The domestic economy is characterized by a dual labor market with formal and informal sectors as observed in most Southern EMU economies. Among formal workers, wage-levels result from efficiency considerations. In the foreign economy, with reference to Northern EMU economies, we assume another type of wage rigidity explained by the presence of unions. More precisely, only wages are bargained between firms and employees as in the right-to-manage model. These rigidities lead to inefficient allocations of workers in each country: a misallocation of workers among sectors in the domestic country and unemployment in the foreign one. In this context, the labor market flexibilization may appear as a relevant option for improving the situation of activity and employment in the monetary union. This is the reason why we investigate the overall effects of a decrease in trade union bargaining power in the foreign (Northern) economy. We show that, at the new equilibrium, a lower bargaining power in the foreign economy leads to a decrease in all prices and the effects are positive overall. In the foreign economy, the equilibrium level of production is higher, unemployment decreases and wages are lower. In the domestic one, the production also increases, the labor market benefits from a better allocation of workers between formal and informal sectors, and all wages are higher.
    Keywords: efficiency wage, dualism, EMU, trade unions, bargaining.
    JEL: E60 F16 F41 J31
    Date: 2013
  5. By: Ghani, Ejaz; Kanbur, Ravi; O'Connell, Stephen D.
    Abstract: This paper presents an exploration at the intersection of four important themes in the current development discourse: urbanization, agglomeration benefits, gender and informality. Focusing on the important policy objective of new enterprise creation in the informal sector, it asks and answers four specific questions on the impact of urbanization and gender. It finds that (i) the effect of market access to inputs, on creation of new enterprises in the informal sector, is greater in more urbanized areas; (ii) This"urbanization gradient"also exists separately for the creation of female owned enterprises and male owned enterprises; (iii) there is a differential impact of female specific market access compared to male specific market access, on female owned enterprise creation in the informal sector ; and (iv) gender specific market access to inputs matters equally in more or less urbanized areas. Among the policy implications of these findings are that (i) new enterprise creation by females can be encouraged by urbanization, but (ii) the effect can be stronger by improving female specific market access, especially to inputs. The analysis in this paper opens up a rich research agenda, including further investigation of the nature of input based versus output based perspectives on agglomeration benefits, and exploration of policy instruments that can improve female specific market access, which is shown to increase female owned enterprise creation.
    Keywords: Markets and Market Access,Housing&Human Habitats,Microfinance,Gender and Health,Debt Markets
    Date: 2013–08–01
  6. By: Tobias Stoehr
    Abstract: In many poor countries with high emigration rates elderly people are left behind without care when their children migrate. Without a functioning market in private care migrants face a difficult trade-off between working their way out of poverty and providing informal care once their parents become frail or sick. I develop a non-cooperative model of siblings' interactions that explains how chain migration can lead to a breakdown of traditional caregiving structures while an opposing endogenous effect increases family members' incentives to specialize as caregiver. The model's predictions are tested using novel data from Moldova and found to perform better than predictions of some established migration models. The empirical analysis suggests that migration and staying in order to provide care are strategic complements for children of elderly parents in most families. This is evidence of a promising resilience of families' informal security arrangements to large-scale migration
    Keywords: migration, elderly care, remittances, intra-family allocation,informal security networks
    JEL: F22 J14 I19 D10
    Date: 2013–07
  7. By: Etienne Wasmer (Département d'économie); Nicolas Lepage-Saucier; Juliette Schleich
    Abstract: Bien que peu prisé des syndicats de salariés et des représentants patronaux, le contrat unique reste paradoxalement au coeur du débat public. Si le contrat unique semble à première vue être une réponse séduisante pour réduire le dualisme, il ne règle pas pour autant les problèmes liés à la précarité et à l’impact de la protection de l’emploi ; ceuxci peuvent être traités par des politiques alternatives ciblées plus efficaces. De plus, bien que réels, les coûts du dualisme sont moins évidents et moins bien démontrés que ceux engendrés par la protection de l’emploi. Enfin, la suppression des CDD entrainerait, à protection inchangée, une perte d’emploi importante car tous ces emplois ne seraient pas remplacés par des CDI compte tenu de la prudence à l’embauche des entreprises. Un assouplissement fort de la protection de l’emploi prévue dans ce nouveau contrat unique serait alors nécessaire, mais il peut d’ores et déjà intervenir dans les cadres légaux actuels et n’a pas à être lié à un nouveau contrat : des contreparties en termes d’assurance chômage ou de formation professionnelle sont possibles.
    Date: 2013–06

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