nep-iue New Economics Papers
on Informal and Underground Economics
Issue of 2015‒08‒19
three papers chosen by
Catalina Granda Carvajal
Universidad de Antioquia

  1. Does Credit-card Information Reporting Improve Small-business Tax Compliance? By Joel Slemrod; Brett Collins; Jeffrey Hoopes; Daniel Reck; Michael Sebastiani
  2. Use of internal information, external information acquisition and customs underreporting By Cyril CHALENDARD
  3. Shedding light on the shadow economy : a nighttime light approach By Tanaka, Kiyoyasu; Keola, Souknilanh

  1. By: Joel Slemrod; Brett Collins; Jeffrey Hoopes; Daniel Reck; Michael Sebastiani
    Abstract: We investigate the response of small businesses operating as sole proprietorships to Form 1099-K, an information report released in 2011 which provides the Internal Revenue Service with information about payment card sales. Theory and distributional analysis isolates affected taxpayers, who report receipts equal to or slightly exceeding the receipts reported on 1099-K. Information reporting made these taxpayers more likely to file a return declaring business income, and increased filers’ reported receipts by up to 24 percent. Taxpayers largely offset increased reported receipts with increased reported expenses, which do not face information reporting, diminishing the impact on reported net taxable income.
    JEL: H26
    Date: 2015–07
  2. By: Cyril CHALENDARD
    Abstract: This paper identifies opportunities for improving the performance of revenue-collection authorities. To detect and combat fraud, we argue that revenue-collection authorities should, notably in the absence of reliable third-party information, exploit non-usual sources of information. Specifically, our micro-level study of customs evasion provides evidence that using any internal or external available source of information facilitates customsenforcement. Estimates highlight that exploiting historical data and/or relying on an information provider - a pre-shipment inspection company - significantly reduces evasion in Cameroon. The potential endogeneity of pre-shipment inspections is addressed by using instrumental variables. Results are robust to a variety of additional checks.
    Keywords: Use of internal information, External Information acquisition, Customs enforcement, Tax evasion, Pre-shipment inspections.
    JEL: O17 F13 K42 H83 H26
    Date: 2015–07
  3. By: Tanaka, Kiyoyasu; Keola, Souknilanh
    Abstract: Measuring the shadow economy is inherently difficult, but critical for understanding economic development. Using census data on formal and informal sectors in Cambodia, we document that 96.6% of non-farm establishments do not formally register with the government, and their sales accounted for 76.6% of total sales in 2011. We estimate a relationship between nighttime light and sales across regions separately for formal and informal firms for 2011, and estimate their past sales from changes in nighttime light for 1993-2010. Both formal and informal firms increased their estimated sales, and the share of informal sales increased from 68.8% in 1993 to 76.6% in 2011, suggesting that the informal sector increased quantitatively in both absolute and relative terms throughout the economic development of the Cambodian economy.
    Keywords: Cambodia, Employment, Informal sector, Informal employment, Satellite data
    JEL: E26 H26 O17
    Date: 2015–08

This nep-iue issue is ©2015 by Catalina Granda Carvajal. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.