nep-iue New Economics Papers
on Informal and Underground Economics
Issue of 2014‒05‒17
thirteen papers chosen by
Catalina Granda Carvajal
Universidad de Antioquia

  1. Universal Health Coverage and the Challenge of Informal Employment: Lessons from Developing Countries By Ricardo Bitran
  2. Unemployment insurance in the presence of an informal By David Bardey; Fermando Jaramillo; Ximena Pena
  3. Informality, growth, and development in Africa By Benjamin, Nancy; Mbaye, Ahmadou Aly
  4. Informal economy in Africa: Building human capital to set the Gazelles free By M. Arouri; A. Bwn Youssef; Ceyhun Elgin
  5. Tax Enforcement, Technology, and the Informal Sector By Ceyhun Elgin; Mario Solis-Garcia
  6. Pollution and Informal Economy By Ceyhun Elgin; Oguz Oztunali
  7. Fairness in Tax compliance: A Political Competition Model By Ángel Solano García
  8. The behavioralist as tax collector: Using natural field experiments to enhance tax compliance By Michael Hallsworth; John List; Robert Metcalfe; Ivo Vlaev
  9. Savings by and for the poor: A research review and agenda By Karlan, Dean; Ratan, Aishwarya Lakshmi; Zinman, Jonathan
  10. Development as diffusion: Manufacturing productivity and sub-Saharan Africa.s missing middle By Gelb, Alan; Meyer, Christian J.; Ramachandran, Vijaya
  11. Rigideces nominales en una economía con un amplio sector informal By Monica Gomez; Fermando Jaramillo
  12. Análisis del ciclo económico en una economía con rigideces nominales y un amplio sector informal By Monica Gomez
  13. Informalidad laboral en los centros urbanos de Colombia: ¿Depende del desplazamiento forzado? By Adriana María Romero Barreto

  1. By: Ricardo Bitran
    Abstract: The aim of the report is to review existing approaches and available policy options to improve access to health care services and financial protection against health shocks for informal-sector workers (ISWs). Along with their families, ISWs represent the majority of the population in many developing countries. The report reviews the definition and measurement of the informal sector and the literature on efforts toward its health insurance coverage. It also examines several country cases based on published and unpublished reports and on structured interviews of expert informants. Developing country efforts to expand health coverage are characterized by a common enrollment and financing pattern, starting with formal-sector workers and following with government-subsidized enrollment of the poor. Thus, ISWs are typically left behind and have been referred to as "the missing middle." They find themselves financially unprotected against health shocks and with limited access to quality and timely health care. ISWs are generally reluctant to enroll in insurance schemes, including social health insurance (SHI), community insurance, and other arrangements. Further, initiatives to enroll them in self-financed contributory schemes have generally resulted in adverse selection, as those with high anticipated health needs are more willing to pay and enroll than others. Successful initiatives to cover this population group are the ones where government has abandoned its expectations to derive relatively substantial revenue from it. Offering this group a benefits package that is relatively smaller than that of formal workers and charging them a premium that is only a fraction of that charged to formal workers is a strategy used by some countries to limit the need for public subsidies. While there is evidence that greater insurance coverage has improved access to health services for ISWs and their dependents, in several countries it has not yet improved financial protection for this target group. A broad set of reforms will be required to strengthen the supply side to ensure that additional public financing translates into improved coverage for ISWs.
    Keywords: absenteeism, access to health care, access to health care services, access to health services, access to services, administrative costs, adverse selection, adverse selection ... See More + problems, Ambulatory care, Capita Health Spending, casual employment, catastrophic expenditures, catastrophic health spending, child health, child health services, Choice of Health Financing System, chronic condition, cities, collection of contributions, Community health, contractual arrangements, costs of health care, delivery system, drugs, elderly people, Employee, Employer contribution, employment effects, Employment Status, enrollees, exposure, families, family income, financial incentives, financial protection, financial risk, financial viability, health care, health care delivery, health care providers, health care reform, HEALTH COVERAGE, Health Expenditure, health expenditures, health facilities, Health Financing, health insurance, health insurance fund, health insurance funds, Health Insurance Plan, health insurance program, Health Insurance Scheme, health insurance schemes, health needs, Health Organization, health policy, health providers, health results, health savings accounts, health sector, health services, health status, health system, health systems, health workers, Health-care, hospitals, household enterprises, household expenditure, household income, Household Survey, Human Development, illness, immigrants, impact evaluations, Income, income countries, income groups, income households, informal economy, INFORMAL EMPLOYMENT, informal sector, informal sector workers, insurance arrangements, insurance contributions, Insurance Plan, integration, jobs, labor force, labor market, Labor relations, Labor supply, Labour, laid-off workers, laws, legal protections, legal requirements, Low income, low-income countries, medical care, medical conditions, medical expenditures, Medical Insurance, medicines, migrants, monthly premium, moral hazard, National Health, National Health Insurance, nongovernmental organizations, Nutrition, outpatient care, outpatient services, patients, payroll tax, pocket payments, preliminary results, previous studies, private employment, private enterprises, private health insurance, private insurance, private insurers, Private providers, private sector, private sector workers, probability, production units, public health, public providers, public sector, public spending, quality of care, risk sharing, safety nets, Servants, social development, social health insurance, Social Security, Social security benefits, total employment, unemployed, unemployment, unemployment insurance, unintended consequence, universal health insurance coverage, unpaid workers, wage gap, worker, workers, working conditions, younger workers
    Date: 2014–01
  2. By: David Bardey; Fermando Jaramillo; Ximena Pena
    Abstract: Abstract: We study the effect of UI benefits in a typical developing country where the informal sector is sizeable and persistent. In a partial equilibrium environment, ruling out the macroeconomic consequences of UI benefits, we characterize the stationary equilibrium of an economy where policyholders may be employed in the formal sector, short-run unemployed receiving UI benefits or long-run unemployed without UI benefits. We perform comparative static exercises to understand how UI benefits affect unemployed workers' effort to secure a formal job, their labor supply in the informal sector and leisure time. Our model reveals that an increase in UI benefits generates two opposing effects for the short-run unemployed. First, since search efforts cannot be monitored it generates moral hazard behaviours that lower effort. Second, it generates an income effect as it reduces the marginal cost of searching for a formal job and increases effort. The overall effect is ambiguous and depends on the relative strength of these two e§ects. Additionally, we show that an increase in UI benefits increases the efforts of long-run unemployed workers. We provide a simple simulation exercise which suggests that the income effect pointed out is not necessarily of second-order importance in comparison with moral hazard strength. This result softens the widespread opinion, usually based on the microeconomic/partial equilibrium argument that the presence of dual labor markets is an obstacle to providing UI in developing countries.
    Keywords: Unemployment insurance, informal sector, income e§ect, developingcountries
    JEL: H55 I38 J65
    Date: 2013–09–03
  3. By: Benjamin, Nancy; Mbaye, Ahmadou Aly
    Abstract: The informal sector makes up an overwhelming share of both gross domestic product and total employment in Africa. In this paper, we lay out some of the basic characteristics of the informal sector in sub-Saharan Africa, relevant institutions, and developm
    Keywords: informal enterprises, employment, demography, Africa, migration
    Date: 2014
  4. By: M. Arouri; A. Bwn Youssef; Ceyhun Elgin
    Date: 2014–04
  5. By: Ceyhun Elgin; Mario Solis-Garcia
    Date: 2014–05
  6. By: Ceyhun Elgin; Oguz Oztunali
    Date: 2014–03
  7. By: Ángel Solano García (Department of Economic Theory and Economic History, University of Granada.)
    Abstract: This paper analyzes the political economy of income redistribution when voters are concerned about fairness in tax compliance. We consider a two stage-model where there is a two-party competition over the tax rate and over the intensity of the tax enforcement policy in the first stage, and voters decide about their level of tax compliance in the second stage. We find that if the concern about fairness in tax compliance is high enough, a liberal middle-income majority of voters may block any income redistribution policy. Alternatively, we find an equilibrium in which the preferences of the median voter are ignored in favor of a coalition formed by a group of relatively poor voters and the richest voters. In this equilibrium income redistribution prevails with no tax enforcement.
    Keywords: tax evasion, political parties, income redistribution, fairness.
    JEL: D72 H26
    Date: 2014–04–15
  8. By: Michael Hallsworth; John List; Robert Metcalfe; Ivo Vlaev
    Abstract: Tax collection problems date back to the earliest recorded history of mankind. This paper begins with a simple theoretical construct of paying (rather than declaring) taxes, which we argue has been an overlooked aspect of tax compliance. This construct is then tested in two large natural field experiments. Using administrative data from more than 200,000 individuals in the UK, we show that including social norms and public goods messages in standard tax payment reminder letters considerably enhances tax compliance. The field experiments increased taxes collected by the Government in the sample period and were cost-free to implement, demonstrating the potential importance of such interventions in increasing tax compliance.
    Date: 2014
  9. By: Karlan, Dean; Ratan, Aishwarya Lakshmi; Zinman, Jonathan
    Abstract: The poor can and do save, but often use formal or informal instruments that have high risk, high cost, and limited functionality. This could lead to undersaving compared to a world without market or behavioural frictions. Undersaving can have important we
    Keywords: poverty, randomized evaluation, savings
    Date: 2014
  10. By: Gelb, Alan; Meyer, Christian J.; Ramachandran, Vijaya
    Abstract: We consider economic development of sub-Saharan Africa from the perspective of slow convergence of productivity, both across sectors and firms within sectors. Why have .productivity enclaves., islands of high productivity in a sea of smaller low-productiv
    Keywords: productivity, manufacturing, dualism, firms, sub-Saharan Africa
    Date: 2014
  11. By: Monica Gomez; Fermando Jaramillo
    Date: 2013–08–01
  12. By: Monica Gomez
    Abstract: Resumen: En este trabajo se construye un modelo de Equilibrio General Dinámico Estocástico (DSGE por su siglas en inglés) con sector informal y rigideces en precios, usando como marco de análisis la teoría de búsqueda y emparejamiento del mercado de trabajo. El objetivo principal es analizar el efecto de los diferentes tipos de choques económicos sobre las principales variables del mercado laboral, en una economía con presencia importante del sector informal. Igualmente se estudia el efecto de la política monetaria, ya que la presencia de este sector afecta la dinámica del ciclo económico, y por ende los mecanismos de transmisión de la política monetaria.
    Keywords: Política monetaria, trabajo informal, rigideces nominales, búsqueda y emparejamiento
    JEL: E52 E32 J64
    Date: 2013–08–01
  13. By: Adriana María Romero Barreto
    Abstract: El artículo revisa las consecuencias socioeconómicas más importantes del desplazamiento forzado en Colombia. Motivado por lo anterior, se estima la probabilidad de pertenencia al desempleo, al sector laboral formal, y a la informalidad laboral para la población migrante residente en los centros urbanos de Colombia, distinguiendo entre migrantes por motivo laboral y migrantes por motivo violento. Los resultados indican que, para el individuo promedio, ser un migrante por motivo violento incide negativamente en la probabilidad de encontrarse ocupado en el sector formal, mientras que incide positivamente en encontrarse ocupado en el sector informal o en encontrarse desempleado. Igualmente, se encuentra que la situación laboral para los migrantes por motivo violento persiste a medida que aumentan los años de residencia en el centro urbano de llegada. ************************************************* Abstract The paper reviews the most important socioeconomic consequences of the forced migration in Colombia. Motivated by this, the probability of belonging to unemployment, the formal labor sector, and the labor informality is estimated for the migrant population who reside in the urban centers of Colombia, distinguishing between migrants by labor motivation and migrants by violent motivation. Results show that, for the average individual, being a migrant by violent motivation has a negative influence on the probability of being a worker in the formal sector, whereas it has a positive influence on the probability of being an informal worker and on the probability on being unemployed. It is also found that the labor situation for migrants by violent motivation is persistent with increasing time of residence in the urban center of arrival.
    Date: 2013–07–22

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