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on Informal and Underground Economics |
| By: | Maria Letizia Bertotti; Giovanni Modanese |
| Abstract: | We investigate the effect of tax evasion on the income distribution and the inequality index of a society through a kinetic model described by a set of nonlinear ordinary differential equations. The model allows to compute the global outcome of binary and multiple microscopic interactions between individuals. When evasion occurs, both individuals involved in a binary interaction take advantage of it, while the rest of the society is deprived of a part of the planned redistribution. In general, the effect of evasion on the income distribution is to decrease the population of the middle classes and increase that of the poor and rich classes. We study the dependence of the Gini index on several parameters (mainly taxation rates and evasion rates), also in the case when the evasion rate increases proportionally to a taxation rate which is perceived by citizens as unfair. Finally, we evaluate the relative probability of class advancement of individuals due to direct interactions and welfare provisions, and some typical temporal rates of convergence of the income distribution to its equilibrium state. |
| Date: | 2014–01 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1403.0015&r=iue |
| By: | Doerrenberg, Philipp; Duncan, Denvil; Zeppenfeld, Christopher |
| Abstract: | This paper examines whether risk-taking in a lottery depends on the opportunity to respond to the lottery outcome through additional labor effort and/or tax evasion. Previous empirical attempts to answer this question face identification issues due to self selection into jobs that facilitate tax evasion and labor effort exibility. We address these identification issues using a laboratory experiment (N = 180). Subjects have the opportunity to invest earned income in a lottery and, depending on randomly assigned treatment states, have the opportunity to respond to the lottery outcome through evasion and/or extra labor effort. We find strong evidence that ex-post access to labor opportunities reduces ex-ante risk willingness while access to tax evasion has no effect on risk behavior. We discuss possible explanations for this result based on the existing literature. -- |
| Keywords: | Tax Evasion,Labor Supply,Risk Behavior,Lab Experiment |
| JEL: | G11 H21 H24 H26 J22 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:14014&r=iue |
| By: | Marchese, Carla |
| Abstract: | A tax amnesty can be a useful tax policy tool when exploited in exceptional circumstances. Amnesties can also be used systematically as a discriminatory mechanism to improve the efficiency or even the equity of the tax system, but only if government commitment to enforcing tax law is credible. If such credibility is lacking, amnesties may actually undermine future tax revenue by breaching the implicit, psychological contract between taxpayers and the state, thus reducing taxpayers’ internal motivation for compliance. Amnesties also have important political implications, because they can signal intertemporal inconsistency in government decision-making and may be linked to the political business cycle. Amnesties respond to externalities among states or layers of government deriving from tax and enforcement policies, and network effects in these fields can trigger waves of amnesties. |
| Keywords: | tax amnesty, tax evasion, tax policy |
| JEL: | H20 H26 K34 |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:uca:ucaiel:17&r=iue |
| By: | Benno Torgler |
| Abstract: | Historically, tax compliance has been a highly interdisciplinary avenue of research to which economics, psychology, law, sociology, history, political science, and accountancy have made valuable contributions. It is less well understood, however, whether we can glean useful insights into tax compliance by moving beyond the social sciences. In particular, the literature pays little attention to the relevance of biology. This paper attempts to remedy this shortcoming by examining the potential opportunities and limitations of introducing biological concepts into tax compliance research. |
| Keywords: | tax compliance, tax morale, tax evasion, biology, genetics, neurobiology, demography, human drives, agent-based modelling |
| JEL: | H26 B40 B52 C63 D03 Z19 |
| Date: | 2014–03–07 |
| URL: | http://d.repec.org/n?u=RePEc:qut:qubewp:wp025&r=iue |
| By: | Cantens, Thomas; Kaminski, Jonathan; Kaminski, Jonathan; Raballand, Gael; Tchapa, Tchouawou |
| Abstract: | Based on extensive interviews with informal importers and brokers in Cameroon, this paper explains why customs reform aimed at reducing fraud and corruption may be difficult to achieve. Informal traders and brokers (without licenses) follow various business models and practices, which are product-specific. Overall, what matters first are customs brokers'practices. Information asymmetries mark transactions between brokers and importers and are accompanied by misperceptions of the costs and risks of informal brokers working among informal importers. In a low-governance environment with widespread informal practices, blanket policies should be avoided in order to discourage activities of unprofessional and systematic bribe-taker brokers. It is also essential that customs officials disrupt information asymmetries and better disseminate information to informal importers on customs processes and official costs. Finally, customs should more strongly sanction some informal brokers in order to reduce collusion with some customs officers. |
| Keywords: | Debt Markets,E-Business,Transport Economics Policy&Planning,Customs and Trade,Financial Intermediation |
| Date: | 2014–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6788&r=iue |
| By: | Chang-Tai Hsieh; Benjamin A. Olken |
| Abstract: | Although a large literature seeks to explain the “missing middle” of mid-sized firms in developing countries, there is surprisingly little empirical backing for existence of the missing middle. Using microdata on the full distribution of both formal and informal sector manufacturing firms in India, Indonesia, and Mexico, we document three facts. First, while there are a very large number of small firms, there is no “missing middle” in the sense of a bimodal distribution: mid-sized firms are missing, but large firms are missing too, and the fraction of firms of a given size is smoothly declining in firm size. Second, we show that the distribution of average products of capital and labor is unimodal, and that large firms, not small firms, have higher average products. This is inconsistent with many models in which small firms with high returns are constrained from expanding. Third, we examine regulatory and tax notches in India, Indonesia, and Mexico of the sort often thought to discourage firm growth, and find no economically meaningful bunching of firms near the notch points. We show that existing beliefs about the missing middle are largely due to arbitrary transformations that were made to the data in previous studies. |
| JEL: | E23 H25 O11 O47 |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19966&r=iue |
| By: | Nagler, Paula (Maastricht University); Naudé, Wim (Maastricht School of Management) |
| Abstract: | We are the first to provide a comparative empirical analysis of non-farm entrepreneurship in rural Africa, using the World Bank's unique LSMSISA dataset. This dataset covers six countries over the period 2005 to 2012. We find that rural enterprises tend to be small, informal household enterprises that provide predominantly goods and services to the local economy, and operate intermittently due to seasonality in farming. We furthermore establish that the likelihood of operating an off-farm enterprise depends on individual capabilities, household characteristics and institutional factors. While the results of some variables show consistency across the sample, we also find much heterogeneity, suggesting that rural entrepreneurship is also a response to country-level circumstances and policies. Although more than 50 years have passed since rural development was identified as a priority for African countries, rural entrepreneurship continues to fulfill mainly a risk-diversifying role. This may suggest that policies to foster effective rural-urban migration and wage employment in rural areas, have largely failed in Africa. |
| Keywords: | entrepreneurship, rural development, Sub-Saharan Africa, informal sector, labour markets, small business, SMEs |
| JEL: | Q12 O13 O55 M13 J43 |
| Date: | 2014–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8008&r=iue |
| By: | DeLancey, Rebecca Mbuh |
| Abstract: | Entrepreneurship has long been recognized as an important player in the development of Korea's economy. This is clearly demonstrated in the humble beginnings of Korea's giant conglomerates such as Samsung, Hyundai, Posco, and LG that started as small businesses. This research presents analysis of entrepreneurial activities of African immigrants in Korea. This study combines data from questionnaires of 45 respondents and in-depth interviews with six of the respondents. The findings of this present research are different from other studies in that this study shows how immigrants fill economic gaps by creating employment for themselves while providing needed services to the immigrant and Korean populations. By creating informal employment, immigrants demonstrate that they are assets in their new environments. Coping mechanisms utilized by immigrant entrepreneurs as they confront challenges that might hinder them from pursuing entrepreneurial activities were revealed in this study. |
| Keywords: | African immigrant entrepreneurs, Korea, entrepreneurial opportunities, entrepreneurial challenges, coping strategies |
| JEL: | M13 M16 |
| Date: | 2014–02–15 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:54050&r=iue |
| By: | RODRIGO LEANDRO DE MOURA; FERNANDO HOLANDA BARBOSA FILH |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:anp:en2013:235&r=iue |
| By: | LUCIANA DOS REIS VELLOSO KALUME; CARLOS HENRIQUE L. CORSEUIL |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:anp:en2012:063&r=iue |
| By: | ANA LUIZA NEVES DE HOLANDA BARBOSA; CARLOS HENRIQUE LEITE CORSEUIL |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:anp:en2012:223&r=iue |
| By: | ISABELA BRANDÃO FURTADO; ENLINSON MATTO |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:anp:en2013:229&r=iue |