nep-iue New Economics Papers
on Informal and Underground Economics
Issue of 2016‒01‒03
five papers chosen by
Catalina Granda Carvajal
Universidad de Antioquia

  1. Illegal Immigration and the Shadow Economy By Camacho, Carmen; Mariani, Fabio; Pensieroso, Luca
  2. Tax Evasion Revised: Surprising Experimental Evidence on the Role of Principal Witness Regulations and Differences in Gender Attitudes By Luigi Mittone; Johannes Buckenmaier; Eugen Dimant
  3. The hidden role of women in family firms By Paula Rodríguez-Modroño; Lina Gálvez-Muñoz; Astrid Agenjo-Calderón
  4. Tenure security premium in informal housing markets : a spatial hedonic analysis By Nakamura,Shohei
  5. Notarial Credit in Eighteenth-Century Trentino: Dynamics and Trends By Marcella Lorenzini

  1. By: Camacho, Carmen (Paris School of Economics); Mariani, Fabio (Université catholique de Louvain); Pensieroso, Luca (IRES, Université catholique de Louvain)
    Abstract: We build a general equilibrium model in which both illegal immigration and the size of the informal sector are endogenously determined. In this framework, we show that indirect policy measures such as tax reduction and detection of informal activities can be used as substitutes for border enforcement, in order to contrast illegal immigration. We also find that a welfare-maximising Government that includes illegal immigration in its objective function, instead of focusing on the well-being of native workers only, will set the tax rate to a lower value.
    Keywords: illegal immigration, informal sector, shadow economy, taxation, immigration policy
    JEL: O17 F22 J61
    Date: 2015–12
  2. By: Luigi Mittone; Johannes Buckenmaier; Eugen Dimant
    Abstract: This paper experimentally investigates indirect tax evasion that requires the cooperation of an intermediary. We explore the effectiveness of the introduction of a principal witness regulation as a means to facilitate tax compliance. Reactions show a significant drop in tax compliance that, surprisingly, is vastly different across gender with the effect being mainly driven by women. As a result, women decrease their tax compliance significantly reaching an even lower level than men who in turn do not react to the institutional change.
    Keywords: indirect tax evasion, gender difference, contextual sensitivity, reciprocity, principal witness regulation
    JEL: D03 D73 D81 H26
    Date: 2015
  3. By: Paula Rodríguez-Modroño (Department of Economics, Quantitative Methods and Economic History, Universidad Pablo de Olavide); Lina Gálvez-Muñoz (Department of Economics, Quantitative Methods and Economic History, Universidad Pablo de Olavide); Astrid Agenjo-Calderón (Universidad Pablo de Olavide)
    Abstract: Women have historically played an important hidden role in family firms, and a great deal of research is now shedding light on this role. In spite of the more formal nature of their work in the present day, still a considerable volume of women’s contributions remains invisible to official statistics. This study, based on interviews with over 500 women in small and medium family firms, brings this informal work into view, quantifying it in terms of hours worked and monetary value, exploring the reasons for its informality and examining the risks and precariousness it entails.
    Keywords: North-South, growth model, innovation assimilation
    JEL: D13 J16 M20 N80
    Date: 2015–11
  4. By: Nakamura,Shohei
    Abstract: This paper estimates slum residents'willingness to pay for formalized land tenure in Pune, India. In so doing, it offers evidence that the legal assurance of slum residents'occupancy of their lands could benefit them. Previous studies have discussed legal and non-legal factors that substantially influence the tenure security of residents in informal settlements. However, it remains unclear to what extent, and how, the assignment of legal property rights through the formalization of land tenure improves the tenure security of residents in informal settlements and living conditions, even in the presence of other legal and non-legal factors that also contribute to their tenure security. To address the question, this study focuses on the city of Pune, India, where government agencies have formalized slums by legally ensuring the occupancy of the residents under"slum declaration."Applying a hedonic price model to an original household survey, this paper investigates how slum residents evaluate formalized land tenure. A spatial econometrics method is also applied to account for spatially autocorrelated unobserved errors. The spatial hedonic analysis finds that the premium of slum declaration is worth 19 percent of the average housing rent in slums. The associated marginal willingness to pay is equivalent to 6 percent of the average household expenditure, although it is heterogeneous depending on a household's caste and other legal conditions. This finding suggests that the assurance of occupancy rights is a vital component of land-tenure formalization policy even if it does not directly provide full property rights.
    Keywords: Housing&Human Habitats,Public Sector Management and Reform,Urban Poverty,Urban Housing,Regional Governance
    Date: 2015–12–30
  5. By: Marcella Lorenzini
    Abstract: This paper investigates the informal credit market in Trentino in the second half of the eighteenth century by drawing upon notaries’ loan contracts. The analysis focuses on four benchmark years: 1750, 1760, 1770, and 1780. More than 10,000 contracts from the period were examined, including 1,200 credit transactions registered in two different cities, Trent and Rovereto. The research aims to analyze dynamics and trends, as well as the mechanisms that characterize the two credit markets, specifically who the borrowers and the lenders were, what capital was borrowed for, and at what price. The findings show stark differences between the two cities’ financial markets. In Trent, whose population amounted to some 9,000, credit activity accounted for 7.7% of all notarial transactions, whereas in nearby Rovereto, with about half that population, credit contracts represented twice as much, 15% of business. Likewise, capital flow reflects the different nature and dynamism of the two towns. In Trent, loans were mainly to finance agriculture and the urban economy (craftsmen, retailers). In Rovereto, where capital flow was nearly three times that of Trent, went largely to sustain agriculture and the flourishing international silk trade. The political and institutional frameworks around the two towns were indeed quite different. Trent, as the capital of the Prince- Bishopric, was chiefly an administrative town and apparently impervious to innovation. But Rovereto, part of the Habsburg Monarchy, was a well-integrated node in an international trade network of rapidly expanding silk manufacturing, whose growth was fostered by the vivid and effective credit market.
    Keywords: informal credit market, notaries, early modern age
    JEL: N23 N53 N63 N93
    Date: 2015

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