nep-iue New Economics Papers
on Informal and Underground Economics
Issue of 2014‒11‒01
five papers chosen by
Catalina Granda Carvajal
Universidad de Antioquia

  1. Welfare and Inequality with Hard-to-Tax Markets By Marcelo Arbex; Enlinson Mattos; Laudo M. Ogura
  2. Does E-Filing Reduce Tax Compliance Costs in Developing Countries? By Jacqueline Coolidge; Fatih Yilmaz
  3. Environmental migration and labor markets in Nepal By Jean-Francois Maystadt; Valerie Mueller; Ashwini Sebastian
  4. Publisher's Announcements and Piracy-Monitoring Devices in Software Adoption By Eric Darmon; Alexandra Rufini; Dominique Torre
  5. La informalidad de los micronegocios en México By Pablo Cotler

  1. By: Marcelo Arbex (Department of Economics, University of Windsor); Enlinson Mattos (São Paulo School of Economics, Getulio Vargas Foundation); Laudo M. Ogura (Economics Department, Grand Valley State University)
    Abstract: Tax enforcement costs constrain the government's ability to observe economic activities, giving rise to hard-to-tax (HTT) markets. In this paper, we develop a Hotelling-type spatial model of sales taxation to analyze the welfare and distributional effects of the existence of HTT transactions. We show that an economy with HTT markets suffers from lower provision of public goods not only due to higher marginal cost of taxation, but also because (i) the planner might be concerned about the inequality in consumption caused by the unequal taxation across markets and (ii) the tax base might be over-extended to allow for a more inclusive taxation.
    Keywords: Sales tax; Tax evasion; Hard-to-tax markets; Public good provision.
    JEL: H1 H21 H26
    Date: 2014–10
  2. By: Jacqueline Coolidge; Fatih Yilmaz
    Keywords: Information Security and Privacy Taxation and Subsidies Private Sector Development - Emerging Markets Finance and Financial Sector Development - Debt Markets Tax Policy Public Sector Development Information and Communication Technologies Macroeconomics and Economic Growth
    Date: 2014–02
  3. By: Jean-Francois Maystadt; Valerie Mueller; Ashwini Sebastian
    Abstract: While an emerging literature cites weather shocks as migration determinants, scant evidence exists on how such migration impacts the markets of receiving communities in developing countries. We address this knowledge gap by investigating the impact of weather-driven internal migration on labor markets in Nepal. An increase of 1 percentage point in net migration reduces wages in the formal sector by 4.8 percentage points. The absence of wage effects in the informal sector is consistent with the exit of low-skilled native workers from the labor market. Understanding entrepreneurial constraints and drivers of labor market exits will inform pathways to resilience.
    Keywords: Environmental migration, weather, conflict, labor markets, Nepal
    JEL: J21 J61 O15
    Date: 2014
  4. By: Eric Darmon (CREM - Centre de Recherche en Economie et Management - CNRS : UMR6211 - Université de Rennes 1 - Université de Caen Basse-Normandie); Alexandra Rufini (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS : UMR7321 - Université Nice Sophia Antipolis (UNS)); Dominique Torre (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS : UMR7321 - Université Nice Sophia Antipolis (UNS))
    Abstract: In this paper, we investigate the distribution strategy of a software publisher. The user adoption context is characterized by uncertainty about quality (experience good) and heterogeneous piracy costs. Users can purchase or get unauthorized/illegal copies (digital piracy) of the software during two periods (or not adopt at all). Between these two periods, users can acquire information through word-of-mouth. To maximize profit, the publisher needs to decide about price, quality and level of monitoring of piracy. We show that the software publisher can profit from accommodation a certain level of piracy of the product. We add to the literature by explicitly considering the opportunity for the publisher to cheat about future price and monitoring levels (misleading announcements). This strategy that is falsely permissive towards piracy, can sometimes appear more profitable. However, when the degree of sophistication of user expectations about the publisher's strategy increases, only a strategy that is permissive (with respect to piracy) with non misleading announcements remains robust.
    Keywords: software distribution strategy ; piracy ; experience good ; misleading announcements
    Date: 2014
  5. By: Pablo Cotler (Department of Economics, Universidad Iberoamericana, Mexico City. Mexico)
    Abstract: The opacity with which firms conduct their transactions and hence its limitation to socialize their performance are perhaps one of the factors that limit the rate of productivity growth. Based on a national survey of microenterprises, this paper examines the empirical validity of the predictions derived from a theoretical model that analyze the costs and benefits of being informal. The ecosystem where the entrepreneur works, their expectations of growth, the size of their business and their commercial networks are factors that help may explain why some firms are informal and others not.
    Date: 2014

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