nep-iue New Economics Papers
on Informal and Underground Economics
Issue of 2013‒10‒25
five papers chosen by
Catalina Granda Carvajal
Universidad de Antioquia

  1. Shadow economy and tax revenue in Africa By Kodila-Tedika, Oasis; Mutascu, Mihai
  2. Compliance cost estimates: Survey non-response and temporal framing effects By Eichfelder, Sebastian
  3. Has Atypical Work Become Typical in Germany?: Country Case Studies on Labour Market Segmentation By Werner Eichhorst; Verena Tobsch
  4. Does risk matter for occupational choices? Experimental evidence from an African labour market By Paolo Falco
  5. Islamic finance and financial inclusion: measuring use of and demand for formal financial services among Muslim adults By Demirguc-Kunt, Asli; Klapper, Leora; Randall, Douglas

  1. By: Kodila-Tedika, Oasis; Mutascu, Mihai
    Abstract: The paper explores the effects of shadow economy on tax revenues, in the case of several African countries, based on a panel-model approach. The data-set covers the period 1999-2007. The main results reveal that the shadow economy has a significant and negative impact on tax revenues. In other word, when the shadow economy tends to extend, the level of tax revenues decreases. These outputs show that the African governments, in order to maximise the collected tax revenues, should better “control” the shadow economy phenomenon.
    Keywords: Shadow economy, Tax revenues, Effects, Implications, Africa
    JEL: H11 H20 H26
    Date: 2013
  2. By: Eichfelder, Sebastian
    Abstract: Due to empirical research, tax and accounting compliance costs are a considerable burden for private businesses. However, cost estimates may be biased due to survey nonresponse and questionnaire framing effects. This paper investigates the impact of both aspects on the estimated cost burden. I do not find significant evidence for a non-response bias. By contrast, my results indicate that framing effects regarding the temporal dimension of cost measurement (temporal framing effects) might alter cost estimates by up to 68 percent downwards (respectively 211 percent upwards). There is also evidence that temporal framing effects are more relevant for small self-employed businesses with limited information capacities and accounting obligations as well as for internal cost burdens. --
    Keywords: compliance cost measurement,measurement error,non-response bias,temporal framing effect
    JEL: H25 K34 M41 M42 M48
    Date: 2013
  3. By: Werner Eichhorst; Verena Tobsch
    Abstract: This paper gives an overview of the transformation of the German labor market since the mid-1990s with a special focus on the changing patterns of labor market segmentation or ‘dualization’ of employment in Germany. While labor market duality in Germany can partially be attributed to labor market reforms promoting in particular non-standard forms of employment and allowing for an expansion of low pay, structural changes in the economy as well as strategic choices by employers and social partners also play a prominent role.
    Keywords: Germany, non-standard work, low pay, labor market segmentation
    JEL: J21 J31 J58
    Date: 2013
  4. By: Paolo Falco
    Abstract: This paper investigates the role of risk-aversion in the allocation of workers between formal and informal jobs in Ghana. In the model I propose risk-averse workers can opt between the free-entry informal sector and queuing for formal occupations. Conditional on identifying the riskier option, the model yields testable implications on the relationship between risk-preferences and workers’ allocation. My testing strategy proceeds in two steps. First, I estimate expected income uncertainty through panel data and find it significantly higher in the informal sector. Second, using novel experimental data to elicit individual attitudes to risk, I estimate the direct effect of risk-aversion on occupational choices and find that, in line with the first result, more risk-averse workers are more likely to queue for formal jobs and less likely to be in the informal sector. The results bear important implications for the optimal design of employment policies and social security.
    Keywords: sector allocation; occupational choices; risk-aversion; informality
    JEL: C93 J21 J24 J64 O17
    Date: 2013
  5. By: Demirguc-Kunt, Asli; Klapper, Leora; Randall, Douglas
    Abstract: In recent years, the Islamic finance industry has attracted the attention of policy makers and international donors as a possible channel through which to expand financial inclusion, particularly among Muslim adults. Yet cross-country, demand-side data on actual usage and preference gaps in financial services between Muslims and non-Muslims have been scarce. This paper uses novel data to explore the use of and demand for formal financial services among self-identified Muslim adults. In a sample of more than 65,000 adults from 64 economies (excluding countries where less than 1 percent or more than 99 percent of the sample self-identified as Muslim), the analysis finds that Muslims are significantly less likely than non-Muslims to own a formal account or save at a formal financial institution after controlling for other individual- and country-level characteristics. But the analysis finds no evidence that Muslims are less likely than non-Muslims to report formal or informal borrowing. Finally, in an extended survey of adults in five North African and Middle Eastern countries with relatively nascent Islamic finance industries, the study finds little use of Sharia-compliant banking products, although it does find evidence of a hypothetical preference for Sharia-compliant products among a plurality of respondents despite higher costs.
    Keywords: Access to Finance,Banks&Banking Reform,Islamic Finance,Debt Markets,Emerging Markets
    Date: 2013–10–01

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