nep-iue New Economics Papers
on Informal and Underground Economics
Issue of 2013‒12‒20
six papers chosen by
Catalina Granda Carvajal
Universidad de Antioquia

  1. Ghost-House Busters: The Electoral Response to a Large Anti Tax Evasion Program By Casaburi, Lorenzo; Troiano, Ugo
  2. The Quality of Public Education in Unequal Societies: The Role of Tax Institutions By Kammas, Pantelis; Litina, Anastasia; Palivos, Theodore
  3. Demand factors that influence financial inclusion in Mexico. Analysis of the barriers based on the ENIF survey By Carmen Hoyo; Ximena Pena; David Tuesta
  4. Liberalization and financial sector competition: a critical contribution to the empirics with an African assessment By Asongu Simplice
  5. How do institutions matter in the income-equalizing effect of mobile phone penetration? By Asongu, Simplice A
  6. Factores de demanda que influyen en la Inclusion Financiera en Mexico. Analisis de las barreras a partir de la ENIF By Carmen Hoyo; Ximena Pena; David Tuesta

  1. By: Casaburi, Lorenzo; Troiano, Ugo
    Abstract: The incentives of political agents to enforce tax collection are key determinants of the levels of compliance. We study the electoral response to the Ghost Buildings program, a nationwide anti-tax evasion policy in Italy that used innovative monitoring technologies to target buildings hidden from tax authorities. Two million buildings were registered as a result of the program. Our difference-in-differences identification strategy exploits both variation across towns in the ex-ante program scope to increase enforcement as well as administrative data on actual building registrations. Local incumbents experience an increase in their reelection likelihood as a consequence of the policy. In addition, these political returns are higher in areas with lower tax evasion tolerance and with higher speed of public good provision, implying complementarity among enforcement policies, the underlying tax culture, and government efficiency.
    Keywords: tax evasion, public economics, political economics
    JEL: D72 E62 H26
    Date: 2013–12–12
  2. By: Kammas, Pantelis; Litina, Anastasia; Palivos, Theodore
    Abstract: This paper examines the effect of income inequality on the quality of public education in the presence of weak institutions and tax evasion. Our theoretical model predicts that higher level income inequality within a country leads to lower quality of public education and that this effect is diminishing on the quality of institutions. The effect of inequality operates via two channels, namely via an impact on the resources allocated to public education and via an impact on the number of individuals participating in the public schooling scheme. Exploiting variations in the levels of inequality and governance across countries, the empirical analysis confirms the theoretical predictions.
    Keywords: Quality of Public Education, Income Inequality, Tax Evasion.
    JEL: D63 H26 I2
    Date: 2013–12–13
  3. By: Carmen Hoyo; Ximena Pena; David Tuesta
    Abstract: In Mexico 62% of adults between the ages of 18 and 70 do not have formal savings or credit products, even though 97% of adults have access to them through different channels. The difference between the supply and the effective use of the financial system means the existence of demand barriers that have not been explored fully so far. Thanks to the interest of the Mexican government in measuring and evaluating financial inclusion from the point of view of supply and demand, the first National Financial Inclusion Survey (Encuesta Nacional de Inclusión Financiera, ENIF) was applied in 2012 in Mexico. It has become a model in Latin America for the study of demand for financial services. Using ENIF data, and a probit model, we have analyzed the socioeconomic factors that from the point of view of individual demand, influence the decision of whether or not to use formal saving or credit financial services in Mexico. According to our analysis, the insufficiency or variability of income and self-exclusion are the most important barriers in the Mexican market. They are influenced by three types of factors: 1) variables that denote individual vulnerability, such as income level, gender, education and occupation; 2) geographical variables with respect to the size of the community in which the individual lives (towns with a population of less than 15,000 or more than 15,000; and 3) variables that appear related to a preference for the informal financial market, such as the capacity to respond to exogenous shocks and belonging to households with a capacity to save.
    Keywords: financial inclusion, financial institutions, barriers, personal finance
    JEL: C01 D14 G21
    Date: 2013–12
  4. By: Asongu Simplice (Yaoundé/Cameroun)
    Abstract: This paper investigates how financial, trade, institutional and political liberalization policies have affected financial sector competition in Africa using updated data to appraise second generation reforms. The ‘freedom to trade’ and ‘economic freedom’ indices are employed. Hitherto, unexplored financial sector concepts of formalization, semi-formalization, informalization and non-formalization are also introduced. The following findings are established. Firstly, relative to money supply: (1) with the exception of the economic freedom mechanism, liberalization policies have generally decreased the growth of the formal financial sector to the benefit of other financial sectors; (2) apart from the foreign direct investment and economic freedom channels, liberalization policies have been fruitful for semi-formal financial development at the cost of other financial sectors and; (3) with the exception of economic freedom, both the informal and non-formal sectors have developed owing to liberalization to the detriment of the formal financial sector. Secondly, relative to GDP, the semi-formal, informal and/or non-formal financial sectors have also generally improved as a result of liberalization. Policy implications are discussed.
    Keywords: Welfare; Banking; Liberalization; Shadow economy; Africa
    JEL: D60 E50 F30 O17 O55
    Date: 2013–09
  5. By: Asongu, Simplice A
    Abstract: The object of this paper is to complement theoretical ‘mobile penetration’ literature with empirical evidence in a dual manner: on the one hand, assess the income-redistributive effect of mobile phone penetration and; on the other hand, the instrumentality of good governance in this nexus. Main findings suggest an equalizing income-redistributive effect, with a higher magnitude in the presence of government quality instruments. It follows that, good governance is a necessary condition for a higher income-equalizing effect of mobile phone penetration. The empirical evidence which deviates from mainstream country-specific and microeconomic survey-based approaches is on 52 African countries. ‘Mobile phone’-oriented poverty reduction channels are also discussed.
    Keywords: Mobile Phones; Shadow Economy; Poverty; Inequality; Africa
    JEL: E00 G20 I30 L96 O33
    Date: 2013–09
  6. By: Carmen Hoyo; Ximena Pena; David Tuesta
    Abstract: En Mexico el 62 por 100 de los adultos entre 18 y 70 anos no tiene productos de ahorro o de credito en instituciones financieras formales, a pesar de que el acceso a traves de distintos canales esta disponible para el 97 por 100 de los adultos. La diferencia entre la oferta y el uso efectivo del sistema financiero supone la existencia de barreras de demanda que han sido poco exploradas hasta el momento. Gracias al interes del gobierno mexicano para medir y evaluar la inclusion financiera desde el punto de vista de la oferta y de la demanda, en el ano 2012 en Mexico se aplico la primera Encuesta Nacional de Inclusióon Financiera (ENIF), la cual se constituye en un referente en America Latina para el estudio de la demanda de servicios financieros. Con los datos de la ENIF, a partir de un modelo probit, analizamos los factores socioeconomicos que desde el punto de vista de la demanda individual influyen en la decision de no usar los servicios financieros formales de ahorro o credito en Mexico. De acuerdo con el analisis realizado, la insuficiencia o variabilidad del ingreso y la autoexclusion son las barreras mas importantes en el mercado mexicano, las cuales están influidas por tres tipos de factores: 1. variables que denotan vulnerabilidad individual como el nivel de ingresos, el genero, la educacion y la ocupacion; 2. Variable geografica sobre el tamano de la comunidad donde habita el individuo (localidades con menos de 15 mil habitantes o mas de 15 mil habitantes); y 3. variables que parecen relacionarse con la preferencia por el mercado financiero informal, como la capacidad de responder a shocks exogenos y el pertenecer a hogares con capacidad de ahorro.
    Keywords: inclusion financiera, instituciones financieras, barreras, finanzas personales
    JEL: C01 D14 G21
    Date: 2013–12

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