|
on Informal and Underground Economics |
| By: | K. Sudhir (Cowles Foundation & School of Management, Yale University); Debabrata Talukdar (State University of New York at Buffalo) |
| Abstract: | Firms make investments in technology to increase productivity. But in emerging markets, where a culture of informality is widespread, information technology investments leading to greater transparency can impose a cost through higher taxes and need for regulatory compliance. We examine this tradeoff between productivity and transparency by examining IT adoption in the Indian retail sector. We find that computer technology adoption is lower when firms have motivations to avoid transparency. Specifically, technology adoption is lower when there is greater corruption, but higher when there is better enforcement and auditing. So firms have a higher productivity gain threshold to adopt computers in corrupt business environments with patchy and variable enforcement of the tax laws. Not accounting for this motivation to hide from the formal sector underestimates productivity gains from computer adoption. Thus in addition to their direct effects on the economy, enforcement, auditing and corruption can have indirect effects through their negative impact on adoption of productivity enhancing technologies that also increase operational transparency. |
| Keywords: | Retailing, Information technology, Productivity, Corruption, Informal economy, Emerging markets, Propensity score matching, Treatment effects models |
| JEL: | C31 D22 D33 E26 H26 L81 M15 O33 O53 |
| Date: | 2015–01 |
| URL: | http://d.repec.org/n?u=RePEc:cwl:cwldpp:1980&r=iue |
| By: | Paula Herrera-Idárraga (Department of Econometrics. University of Barcelona); Enrique López-Bazo (Department of Econometrics. University of Barcelona); Elisabet Motellón (Department of Econometrics. University of Barcelona) |
| Abstract: | This paper uses Colombian micro-data to analyze the role of education and informality on regional wage differentials. Our hypothesis is that apart from differences in the endowment of human capital across regions, regional heterogeneity in the incidence of informality is another important source of regional wage inequality in developing and emerging countries. This is confirmed by the evidence from Colombia, which in addition reveals remarkable heterogeneity across territories in the wage return to individuals’ characteristics. Regional heterogeneity in returns to education is especially intense in the upper part of the wage distribution. In turn, heterogeneity in the informal pay penalty is more relevant in the lower part. |
| Keywords: | Regions, Wage differentials, Quantile-based decompositions, Formal/Informal Jobs, Economic Development JEL classification: C21, J31, J38 |
| Date: | 2015–01 |
| URL: | http://d.repec.org/n?u=RePEc:aqr:wpaper:201507&r=iue |
| By: | Meyer-Brauns, Philipp |
| Abstract: | This paper derives the optimal financial contract when a borrowing entrepreneur can evade taxes in a model of costly state verification. In contrast to previous literature on costly state verification and financial contracting, we find that standard debt contracts are not optimal when tax evasion is possible. Instead, the optimal contract is debt-like only for very low and very high profit realizations, and features a constant repayment and verification of returns in an intermediate range. This occurs because the entrepreneur has to be given a positive rent even under verification in order to not abuse her limited liability protection for excessive tax evasion activities. |
| JEL: | G30 H26 D82 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc14:100524&r=iue |
| By: | Dwenger, Nadja; Kleven, Henrik; Rasul, Imran; Rincke, Johannes |
| Abstract: | Is tax compliance driven only by extrinsic motivations such as deterrence and tax policy or is there also a role for intrinsic motivations such as morals, norms and psychology? Agents may comply based on moral sentiments, social norms, guilt and shame (Andreoni et al. 1998), all of which are non-deterrence driven reasons for compliance. The importance of such intrinsically motivated compliance is hard to study empirically and therefore the least understood. This study uses a unique setting for making progress on this question: the local church tax in Germany. As we show in the paper, tax evaders, compliers, and donors can coexist in the local church tax system and be precisely distinguished from each other. Since there is zero deterrence in the baseline, baseline compliance provides a direct measure of intrinsically motivated tax compliance. Starting from the zero deterrence baseline we use a randomized field experiment to inject deterrence or recognition into the system. This allows us to study if policies aimed at either extrinsic motivation (deterrence) or intrinsic motivation (recognition) have qualitatively different effects on agents who have revealed each of those motivations in the baseline. Our main empirical findings are the following. First, a significant fraction of agents (23%) comply in the zero deterrence baseline where compliance would be zero absent intrinsic motivation, while the remaining 77% evade the tax. Intrinsic motivation is therefore substantial, although the majority behaves as rational, self-interested taxpayers. Second, announcing a zero audit probability (the status quo) has a small and insignificant effect on the compliance rate, showing that there is very little misperception on average. Third, tax salience and deterrence have strong effects on compliance for baseline evaders, but small and insignificant effects for baseline donors. This is consistent with the fact that the enforcement constraint is not binding for the intrinsically motivated and therefore they are naturally unresponsive to deterrence. Fourth and finally, recognition through social and monetary rewards for compliance has fundamentally different effects on baseline donors (who increase their payments) and baseline evaders (who reduce their payments). Hence, whether recognition helps or hurts depends crucially on what motivates taxpayers in the first place, with positive effects on the intrinsically motivated and negative effects on the extrinsically motivated. All of our findings can be explained by a model of tax compliance that unifies the standard Becker-Allingham-Sandmo approach (strengthening extrinsic motives for tax compliance) and the Andreoni (1989, 1990) warm-glow model of pro-social behaviour. |
| JEL: | C93 D03 H26 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc14:100389&r=iue |
| By: | Mathieu Lefebvre (Université de Liège, CREPP, 7, Bd Rectorat (B31) Liège 4000, Belgique); Pierre Pestieau (Université de Liège, CREPP, 7, Bd Rectorat (B31) Liège 4000, Belgique ; CORE, Université de Louvain, CEPR et PSE); Arno Riedl (School of Economics and Business, Université de Maastricht, P.O. Box 616, NL-6200 MD Maastricht, Pays-Bas; CESifo, Munich, Allemagne ; IZA, Bonn, Allemagne); Marie Claire Villeval (Université de Lyon, Lyon, F-69007, France ; CNRS, GATE Lyon St Etienne,F-69130 Ecully, France) |
| Abstract: | En période de crise économique, les besoins de l’Etat augmentent et l’assiette fiscale se réduit ; il est alors courant de voir resurgir dans le débat public la lutte contre les diverses formes de fraude qui reduisent les recettes publiques. Dans ce contexte, on oppose régulièrement fraude fiscale à fraude sociale et la discussion porte souvent sur l’importance relative de l’une et de l’autre. On entend par fraude fiscale le détournement illégal d’un système fiscal afin de ne pas contribuer au financement des charges publiques, et par fraude sociale à le fait d’échapper au versement des prélèvements sociaux ou de bénéficier indûment de prestations sociales. Les deux formes de fraude se recoupent parfois. S’il est difficile de mesurer avec précision l’une et l’autre forme de fraude, on estime généralement que la fraude fiscale représente un manque à gagner pour l’Etat beaucoup plus important que la fraude sociale. Cependant, il est important de noter que ces deux types de fraude émanent certainement de populations aux caractéristiques différentes en termes d’activité et de ressources. Il est donc intéressant d’essayer d’identifier les facteurs explicatifs de ces deux types de fraude, à savoir s’ils répondent aux mêmes ressorts économiques et impératifs moraux. Des populations ou des groupes sont souvent stigmatisés pour pratiquer l’un ou l’autre type de fraude. Cet article se propose d’expliquer les facteurs menant à ces deux types de fraude et ce, à partir de données obtenues d’une expérience en laboratoire. De par ses exigences de contrôle et son artificialité, l’expérimentation de laboratoire peut contribuer à apporter des éléments de réponse. En effet, par le choix de valeurs de paramètres appropriées, elle permet de comparer directement les deux types de fraude du point de vue économique de façon à isoler des dimensions non-économiques de la prise de décision. |
| Keywords: | Fraude fiscale, fraude sociale |
| JEL: | C92 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:gat:wpaper:1433&r=iue |
| By: | Milton Camelo Rincón; Jacobo Campo Robledo |
| Abstract: | En este documento se realiza una revisión de los antecedentes macroeconómicos asociados a la vivienda en Bogotá, a partir de la cual se presenta un diagnóstico de la problemática socioeconómica actual en torno al sector. Bajo la hipótesis de la necesidad de una política adecuada acorde con las características de la población objetivo, se realiza una caracterización socio-económica para la localidad Rafael Uribe Uribe, enfocándose en el Barrio La Paz, ubicado al sur oriente de la ciudad de Bogotá. Esta caracterización se llevó a cabo con datos del Censo 2005, por esta razón tiene como ventajas que las conclusiones de la caracterización son generalizables para la población. Con base en el examen de la política de vivienda efectuada durante décadas en Bogotá, el documento sintetiza los principales obstáculos hacia la consolidación de una política sostenible. Como resultado se propone un mecanismo de política alternativa aplicable específicamente para barrios de origen informal como el caso del barrio La Paz en Bogotá. Dicho mecanismo se enfoca en una política basada en el mejoramiento, en particular la construcción en sitio propio con criterios de eficiencia económica y dignidad social. |
| JEL: | D11 R31 Z18 |
| Date: | 2013–08–29 |
| URL: | http://d.repec.org/n?u=RePEc:col:000444:012401&r=iue |