nep-iue New Economics Papers
on Informal and Underground Economics
Issue of 2015‒11‒21
six papers chosen by
Catalina Granda Carvajal
Universidad de Antioquia

  1. Taxation, credit constraints and the informal economy By Julia Passabom Araujo; Mauro Rodrigues
  2. Entrepreneurship in Micro and Small Enterprises: Empirical Findings from a Baseline Study in Northeastern Areas of Delhi, India By Kurosaki, Takashi; Lal, Kaushalesh; Mangal, A. K.; Banerji, Asit; Mishra, S. N.
  3. Voluntary Disclosure Programs for Tax Evaders By Heiner Schmittdiel
  4. Dimensions of Precarity: A Contradictory Case of Non-Standard Employment By Karlsson, Tobias
  5. Creación y Destrucción de Empleos e Informalidad By Nikita Céspedes Reynaga
  6. Crecer no es Suficiente para Reducir la Informalidad By Nikita Céspedes Reynaga

  1. By: Julia Passabom Araujo; Mauro Rodrigues
    Abstract: This paper extends Evans and Jovanovic (1989)’s entrepreneurship model to incorporate the informal sector. Specifically, entrepreneurs can operate either in the formal sector – in which they have limited access to credit markets, but have to pay taxes – or in the informal sector – in which they can avoid paying taxes, but have no access to credit markets. In addition, technology in the informal sector is both less productive and more labor intensive than that in the formal sector. We calibrate the model to the Brazilian economy, and evaluate the impact of credit frictions and taxation on occupational choices, aggregate output and inequality. Removing all distortions can improve aggregate efficiency considerably, largely because this induces entrepreneurs to switch to the formal sector, where technology is superior. Most of this effect comes from removing credit market frictions, but taxes on formal businesses are also important. The elimination of distortions can also reduce inequality, but this comes from credit constraints and labor income taxation. Reducing taxes on formal businesses actually increases inequality in the model.
    Keywords: Informal sector; credit frictions; taxation; entrepreneurship
    JEL: E26 L26 O17
    Date: 2015–11–10
  2. By: Kurosaki, Takashi; Lal, Kaushalesh; Mangal, A. K.; Banerji, Asit; Mishra, S. N.
    Abstract: To deepen our understanding of the urban informal sector and small enterprises in developing countries, we conducted a baseline study of micro and small entrepreneurs in northeastern areas of Delhi, India. The questionnaire-based survey was implemented during November-December 2014, in which 506 entrepreneurs were surveyed who ran enterprises in the manufacturing or service sector. The sample was drawn from a business directory and all fell in the category of micro or small enterprises as defined in the Micro, Small and Medium Enterprises Development Act of 2006. In this paper, we present details of the baseline survey implemented under this project and describe the key variables collected. Out of 506 sample entrepreneurs, 97% were owned by single individuals, and 46% were unregistered with the government. In addition to the standard list of questions, some questions on trust were also included in the General Social Survey style. The trust level towards relatives and friends, neighbors, and business buyers/sellers was found to be significantly higher than the trust level toward government officials, the police, and law officers.
    JEL: O17 O14 L26
    Date: 2015–10
  3. By: Heiner Schmittdiel (Erasmus University Rotterdam, the Netherlands)
    Abstract: In this paper, we develop a model that can explain why governments may want to choose to offer a voluntary disclosure program that allows people who withheld taxes to turn themselves in without punishment. We find that such a leniency rule not only increases government revenue when it comes as a surprise, but even when taxpayers anticipate it.
    Keywords: Tax compliance; voluntary disclosure; guilt
    JEL: H26 K34 K40
    Date: 2015–11–17
  4. By: Karlsson, Tobias (Department of Economic History, Lund University)
    Abstract: This paper discusses the concept of ‘precarious employment’ in relation to the Swedish shipbuilding industry in the 1960s and 1970s. In this setting, characterized by shortage of labour, a dual labour market structure emerged, where some workers were directly employed by the shipyards and others indirectly employed through intermediaries. The case differs from classical accounts of dual labour markets and it is not obvious to use the term precarious employment to describe the situation of the external workers. On the one hand, the external workers had insecure jobs and were involved in triangular employment relationships, where the true identity and responsibility of the employer was unclear. They were also excluded from the social security systems. On the other hand, the external workers appear to have had higher incomes, opportunities to work long hours, less responsibility for unrewarding maintenance tasks and perhaps even the advantage of working under more flexible supervision. The case demonstrates the diversity that can be found in historical work arrangements and suggests that the term precarious employment should be applied with some caution, both past and present.
    Keywords: precarious employment; dual labour markets; shipbuilding industry; Sweden; 20th century
    JEL: J33 J42 L24 N64
    Date: 2015–09–11
  5. By: Nikita Céspedes Reynaga (Ministerio de Economía y Finanzas del Perú)
    Abstract: En este documento se estudia la tasa de creación de empleo y la tasa de separación en Lima Metropolitana, el contexto de estudio es relevante al existir pocos estudios que caracterizan estos indicadores en economías informales y en desarrollo. Encontramos que estos indicadores del sector formal son en promedio similares a los estimados en economías desarrolladas; sin embargo, en el sector informal los valores calculados son aproximadamente tres veces mayores a los del sector formal. Existe una considerable heterogeneidad de las dos series según diversas variables observables; además, las dos variables están relacionadas con el ciclo económico: la tasa de separación es contracíclica y la tasa de encontrar empleo es procíclica, siendo esta ciclicidad mayor en el sector formal.
    Keywords: Creación de empleo, destrucción de empleo, ciclo económico, informalidad laboral, duración de desempleo, duración de empleo
    JEL: E24 E26 J63 J64 O17
    Date: 2015–10
  6. By: Nikita Céspedes Reynaga (Ministerio de Economía y Finanzas del Perú)
    Abstract: En este documento se estudia la relación de la informalidad laboral y el crecimiento económico en el Perú a nivel regional. Se utiliza la tasa de desempleo urbano y al consumo de electricidad por regiones y provincias como indicadores de la actividad económica en el contexto de un modelo de elección discreta de informalidad a nivel de trabajadores. Se encuentra que la elasticidad informalidad-crecimiento es estadísticamente significativa y pequeña, con lo cual, la contribución de la mayor actividad económica en la reducción de la informalidad laboral es también pequeña. Se sugiere que el crecimiento económico repercute en la informalidad mediante la creación de neta de empleos mayormente formales y de mayor productividad respecto a los empleos informales. Además, se muestra que los empleos formales tienen un retorno mayor en términos de salario respecto al sector informal, aunque esta brecha se estaría reduciendo desde inicios de la década del 2010; lo cual estaría debilitando los incentivos hacia la formalización de los empleos.
    Keywords: Informalidad, crecimiento económico, dinámica del empleo, transiciones laborales
    JEL: K20 K30 H11 O17 O40
    Date: 2015–10

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