nep-iue New Economics Papers
on Informal and Underground Economics
Issue of 2015‒01‒31
six papers chosen by
Catalina Granda Carvajal
Universidad de Antioquia

  1. Determinants of Transitions across Formal/Informal Sectors in Egypt By Aysit Tansel ; Zeynel Abidin Ozdemir
  2. Lack of Selection and Poor Management Practices: Firm Dynamics in Developing Countries By Michael Peters ; Ufuk Akcigit
  3. The rise of China and labor market adjustments in Latin America By Artuc, Erhan ; Lederman, Daniel ; Rojas, Diego
  4. Family Ties and Underground Economy By Mauro Marè ; Antonello Motroni ; Francesco Porcelli
  5. Comportamento fiscal e responsabilidade social das empresas By Manuel Castelo Branco
  6. Der Wandel des deutschen Videoverleihmarktes durch Digitalisierung und Internet By Radig, Ann-Kathrin

  1. By: Aysit Tansel (Department of Economics, Middle East Technical University; Institute for the Study of Labor (IZA) Bonn; and Economic Research Forum (ERF) Cairo ); Zeynel Abidin Ozdemir (Department of Economics, Gazi University )
    Abstract: Informality is a salient feature of labor market in Egypt as it is the case with many developing countries. This is the first study of the determinants of worker transitions between various labor market states using panel data from Egypt. We first provide a diagnosis of dynamic worker flows across different labor market states. We develop transition probabilities by gender across different labor market states utilizing Markov transition processes. Next we identify the effects of individual, household, job characteristics and location on different mobility patterns by estimating a multinomial logit regression. The results point to the highly static nature of the Egyptian labor market. Government employment and the out of labor force are the most persistent labor market states. Further, only a few of the explanatory variables except high levels of education are found to have predictive power in explaining the transitions from formal wage, informal wage, self-employment, unemployment government employment and out of labor market states.
    Keywords: Labor market dynamics, informality, Markov processes, multinomial logit, Egypt
    JEL: J21 J24 J40 J63 O17
    Date: 2015–01
  2. By: Michael Peters (London School of Economics ); Ufuk Akcigit (University of Pennsylvania )
    Abstract: As recently shown by Hsieh and Klenow (2012), rm dynamics dier substantially across countries. While firms in the US experience substantial growth during their life-cycle, firms in developing countries, especially in India, barely expand. We present a tractable microfounded endogenous growth model to explain these differences. At the heart of the theory are two sources of heterogeneity across countries. First, we explicitly allow firms to register as formal firms or stay in the informal sector. While informality comes with the benefit of not being subject to taxes and regulation, informal firms are subject to government audits and the risk of being shut down. This lowers the marginal return of technology adoption and informal firms have an incentive to stay small. Second, we incorporate the recent state-of-the-art advances from Bloom and Van Reenen (2010) that managerial practices differ across countries and incorporate managers as a necessary input to run multi-product establishments. Better managers will induce a steeper life-cycle profile as it allows firms to scale up easily and to expand into new product lines. While the model has rich implications for firms' life-cycle, it still has a tractable analytic solution, which we can easily confront with the micro-evidence and calibrate successfully to the data of Hsieh and Klenow (2012).
    Date: 2014
  3. By: Artuc, Erhan ; Lederman, Daniel ; Rojas, Diego
    Abstract: This paper assesses the impact of the rise of China on the trade of Latin American and Caribbean economies. The study proposes an index to measure the impact on trade, which suggests sizable effects, especially in Argentina, Brazil, Chile, Honduras, Mexico, and Paraguay. The paper uses the index and a model of labor mobility, to calculate the impact of China's growth on labor markets in Argentina, Brazil, and Mexico. The resulting evidence suggests that the rise of China has had positive effects on agriculture and mining in Argentina and Brazil, which offset negative impacts on manufacturing industries, thus leaving total employment and real wages virtually unchanged in the long run. In contrast, the estimated impacts of China's rise on Mexico imply that the sizable shock to manufacturing was not offset by the positive shocks on mining and agriculture, reducing employment in the long run. The paper also discusses the effect of China on the degree of informality in these three economies and contrasts short-run and long-run effects on employment and wages across industries.
    Keywords: Economic Theory&Research,Labor Markets,Labor Policies,Markets and Market Access,Trade Policy
    Date: 2015–01–01
  4. By: Mauro Marè (Tuscia University, Italy ); Antonello Motroni (Mefop, Rome, Italy ); Francesco Porcelli (University of Exeter, UK )
    Abstract: This paper reports empirical evidence supporting the hypothesis that family ties should be listed among the causes of tax evasion. In societies where the power of the family is very high, the quality of public institutions tends to be low. This connection shapes the behavior of taxpayers and generates underground economy. The econometric analysis is based on linear panel data models, and a new dataset that combines data on personal values, social capital, and tax morale, in combination with an index of the shadow economy. The final results show that countries where family ties are stronger also exhibit higher underground economy.
    Keywords: family ties, tax evasion, corruption, panel data
    JEL: H26 D73 J12
  5. By: Manuel Castelo Branco (FEP-UP; OBEGEF )
    Abstract: This paper explores the relation between the tax behaviour of corporations and their social responsibility. The negative consequences of corporate tax avoidance and evasion are highlighted, namely those affecting nations. The pernicious social consequences of the generalized use of tax minimization strategies by corporations make their tax behaviour a matter of business assumption of social responsibilities. Moreover, whatever the vision of the corporation one upholds, strategies conceived by corporations with the sole purpose of minimizing their tax burden are considered to be incoherent with the notion of corporate social responsibility.
    Date: 2014–09
  6. By: Radig, Ann-Kathrin
    Abstract: Nicht nur schon lange etablierte Mediensektoren wie die Musik- oder Buchindustrie geraten durch die Digitalisierung und das Internet unter Anpassungsdruck. Auch der Video Home Markt und insbesondere der Videoverleih sehen sich mit neuen digitalen Distributionsformen wie Video on Demand konfrontiert. Im vorliegenden Text erfolgt eine Rekonstruktion der bisherigen sektoralen Entwicklungen auf der Grundlage von aggregierten Marktdaten, Literatur und Gesprächen mit Branchenvertretern. Seit seiner Entstehung war der Videoverleihmarkt nur selten durch stabile Phasen gekennzeichnet, da sich seine Kernakteure seit jeher mit Videopiraterie, sich verändernden Trägermedien (VHS, DVD, Blu-ray) und einem stetig wachsenden Kaufmarkt auseinandersetzen mussten. Mit dem Auftreten von Video on Demand ist nun allerdings ein weiterer einschneidender Entwicklungsschritt erfolgt: Onlinevideotheken wie Videoload, Maxdome oder zuletzt Netflix treten als neue Wettbewerber in den Markt ein, während klassische Videotheken nach und nach verdrängt werden. Stationäre Anbieter können den neuen Geschäftsmodellen aufgrund hoher Markteintrittsbarrieren kaum etwas entgegensetzen. Der derzeit boomende Onlinevideoverleih wird von neuen und vormals sektorfernen Akteuren wie etwa der Deutschen Telekom, ProSiebenSat.1, Amazon oder Apple dominiert.
    Abstract: Digitalization and Internet are challenging a broad variety of established media sectors. This counts for the home video industry and especially the video rental market as well. Based on a review of market data, literature, press releases and expert interviews, this paper analyzes the transition of the German video rental sector. Since its beginnings, its core actors were confronted with piracy, changing media formats and an increasing sell-through market. The emergence of Video on Demand takes these developments another step further: As new competitors, online video stores such as Videoload, Maxdome or Netflix entered the sector, whereas traditional video rental shops are on the verge of being driven out of the market. The booming online video rental market is dominated by a limited set of powerful and formally sector external actors like ProSiebenSat.1, Deutsche Telekom, Amazon or Apple.
    Date: 2015

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