nep-iue New Economics Papers
on Informal and Underground Economics
Issue of 2014‒03‒08
six papers chosen by
Catalina Granda Carvajal
Universidad de Antioquia

  1. The relationship between GDP and the size of the informal economy: Empirical evidence for Spain By Duarte, Pablo
  2. Indirect Job Creation and the Informal Sector in Mexico By Mariana Pereira-López
  3. Taxes on the internet : Deterrence effects of public disclosure By Erlend E. Bø; Joel Slemrod; Thor O. Thoresen
  4. A review and evaluation of methodologies to calculate tax compliance costs By The Consortium consisting of Ramboll Management Consulting, The Evaluation Partnership and Europe Economic Research
  5. Behavioural Economics and Taxation By Till Olaf Weber; Jonas Fooken; Benedikt Herrmann
  6. The Effect of Stolen Goods Markets on Crime: Evidence from a Quasi - Natural Experiment By D'Este, Rocco

  1. By: Duarte, Pablo
    Abstract: The empirical evidence on the linkage of the informal economy and GDP is ambiguous. It depends on the method used to estimate the size of the informal economy. I propose a common factor of four different approximations of the size of the informal economy as an alternative. Using Spain as an example I find that GDP Granger-causes informality, but not the other way around. I also find that positive GDP shocks induce positive and statistically significant responses of the size of the informal economy. --
    Keywords: informal economy,dynamic factor model
    JEL: C38 O17
    Date: 2014
  2. By: Mariana Pereira-López (Postdoctoral Fellow Universidad Iberoamericana)
    Abstract: This paper analyzes the effects of localized labor demand shocks in the tradable sector, such as the establishment of a large tradable firm in a municipality, over nontradable formal and informal jobs in the case of Mexico. Results indicate that locations that experienced this shock have between 8 and 13 thousand more jobs than other municipalities over a ten--year period. Indirect job creation is similar in both the formal and the informal sectors, but informality appears to be more vulnerable to negative shocks. Furthermore, the effects of shocks are symmetric in the formal sector but not in the informal, where negative shocks have greater effects over nontradable employment.
    JEL: J23 R11 R12 R23
    Date: 2014–01
  3. By: Erlend E. Bø; Joel Slemrod; Thor O. Thoresen (Statistics Norway)
    Abstract: Supporters of public disclosure of personal tax information point to its deterrent effect on tax evasion, but this effect has not been empirically explored. Although Norway has a long tradition of public disclosure of tax filings, it took a new direction in 2001 when anyone with access to the Internet could obtain individual information on income, wealth, and income and wealth taxes paid. We exploit this change in the degree of exposure to identify the effects of public disclosure on income reporting. Identification of the deterrence effects of public disclosure is facilitated by the fact that, prior to the shift to the Internet in 2001, some municipalities had exposure which was close to the Internet type of public disclosure, as tax information was distributed widely through paper catalogues that were locally disseminated. We observe income changes that are consistent with public disclosure deterring tax evasion: an approximately 3 percent higher average increase in reported income is found among business owners living in areas where the switch to Internet disclosure represented a large change in access.
    Keywords: Tax Evasion; Income reporting; Quasi-experiments
    JEL: H24 H26 H30
    Date: 2014–01
  4. By: The Consortium consisting of Ramboll Management Consulting, The Evaluation Partnership and Europe Economic Research
    Abstract: This study reviews, assesses and compares twelve methodologies which can be used for measuring compliance costs of taxation. These methodologies are: the Standard Cost Model (SCM), Paying Taxes, the Taxpayer/Business Burden Model, the Total Cost of Regulation to Business (TCR), the Scanning Instrument Regulations of Other Compliance Costs (SIROCCO), the Regulatory Check-up Model (RCM), Guidelines on the Identification and Presentation of Compliance Costs in Legislative Proposals by the Federal Government (GIPCC), the Cost-Driven Approach to Regulatory Burden (CAR), the Complexity Index of the UK Office of Tax Simplification, the Total Cost to Serve (TCS), the Tax Information and Impact Note (TIIN), and the Bureaucracy Cost Index (BKI).
    Keywords: European Union, taxation, tax compliance costs
    JEL: H20 H29
    Date: 2014–02
  5. By: Till Olaf Weber (The University of Nottingham); Jonas Fooken (Joint Research Centre); Benedikt Herrmann (Joint Research Centre)
    Abstract: Most traditional tax policies have been based on classical economic models of tax payers as decision makers.As in many fields where humans make decision, however, more integrated behavioural economic models, that is, models that take into account both psychological and purely economic factors can provide further insights.Therefore, a large literature in the field on the behavioural economics of taxation exists. This report summarizes central parts of this literature, reviewing mainly experimental and observational studies in the academic literature to be informative for policy-makers. It also provides a potential agenda for future research and application of behavioural economic policies with regard to tax compliance.
    Keywords: Tax compliance, behavioural economics, economic experiments, survey
    JEL: D03 H26 H41
    Date: 2014–01
  6. By: D'Este, Rocco (Department of Economics, University of Warwick)
    Abstract: This paper analyses the causal effect of the availability of stolen goods markets on theft crimes. Motivated by the richness of anecdotal evidence, we study this overlooked determinant of crime’s production function through the lens of pawnshops, a widespread business that offers secured loans to people, with items of personal property used as collateral. The endogeneity of pawnshops to crime is addressed in multiple ways. First, we strengthen the hypothesis that pawnshops deal with stolen goods by exploiting the properties of a panel of 2176 US counties from 1997 to 2010. Then, we detect causality exploiting the exogenous rise in the price of gold in a quasi - natural experiment fashion. Specifically, the identification strategy relies on the exogeneity of the interaction between the price of gold, constantly demanded by pawnbrokers in the form of jewels that are melted down to be transformed in a bar of precious metal, and the initial concentration of pawnshops to the county. Conservative estimates show that a one standard deviation increase in gold price generates a 0.05 standard deviation increase in the e.ect of pawnshops on burglaries and robberies. The mechanism behind the causal effect is corroborated by numerous falsification tests on other crimes that disprove the possibility that pawnshops might cause crime through channels other than the demand for stolen goods. Key words: JEL classification:
    Date: 2014

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