nep-iue New Economics Papers
on Informal and Underground Economics
Issue of 2016‒01‒29
four papers chosen by
Catalina Granda Carvajal
Universidad de Antioquia

  1. Wages and Informality in Developing Countries By Costas Meghir; Renata Narita; Jean-Marc Robin
  2. Italy's labour market reforms of 2012: did they reduce unemployment? By Martin Myant
  3. The Poverty Implications of Alternative Tax Reforms: Some Countries Intuitive Results In an Application to Pakistan By Andrew Feltenstein; Carolina Mejia
  4. The Court of Justice of the European Union and fixed-term workers: still fixed, but at least equal By Caroline de la Porte; Patrick Emmenegger

  1. By: Costas Meghir (Economics department); Renata Narita (Universidade de São Paulo (USP)); Jean-Marc Robin (Département d'économie)
    Abstract: We develop an equilibrium wage-posting model with heterogeneous firms that decide to locate in the formal or the informal sector and workers who search randomly on and off the job. We estimate the model on Brazilian labor force survey data. In equilibrium, firms of equal productivity locate in different sectors, a fact observed in the data. Wages are characterized by compensating differentials. We show that tightening enforcement does not increase unemployment and increases wages, total output, and welfare by enabling better allocation of workers to higher productivity jobs and improving competition in the formal labor market.
    Keywords: Equilibrium wage-posting model; Brazilian labor; Formal labor market
    JEL: E26 J24 J31 O15
    Date: 2015–04
  2. By: Martin Myant
    Abstract: This Working Paper critically analyses Italy’s labour market reforms of 2012 (Fornero Reform). It focuses especially on a measure designed to cut unemployment and labour-market dualism by reducing the protection against dismissal enjoyed by permanent employees.
    Keywords: Employment
    Date: 2016–01
  3. By: Andrew Feltenstein (International Center for Public Policy. Andrew Young School of Policy Studies, Georgia State University); Carolina Mejia (World Bank Author Name: David Newhouse; World Bank Author Workplace-Homepage: Author Name: Gohar Sedrakyan; International Center for Public Policy. Andrew Young School of Policy Studies, Georgia State University Author Workplace-Homepage:
    Abstract: This paper presents results from four simulations of the impact of potential tax reforms in Pakistan on poverty, shared prosperity, and inequality. The simulations are carried out in the context of a dynamic computational general equilibrium (CGE) model that incorporates endogenous evasion of the corporate income tax. The simulations are: a forward looking benchmark case, an increase in the corporate income tax from 35 to 45 percent, a rise in the General Sales Tax (GST) from 16 to 17 percent, and an increase in the tariff rate from 14 percent to 19 percent. The simulations link the CGE model to household survey data that is incorporated in a micro simulation model. This “top down” approach permits a disaggregated estimation of the poverty implications of alternative tax and tariff policies. The results indicate, counterintuitively, that the increase in the sales tax leads to milder average increases in poverty than an equal-yield corporate income tax, because the fall in capital investment resulting from the corporate tax increase lowers the marginal product of labor. The simulated tariff increase raises poverty slightly more than the sales tax increase and slightly less than the corporate tax increase. The difference in simulated poverty impacts is small, as the average headcount rate increases by half a percentage point more under the corporate income tax than the sales tax, confirming the limits of indirect taxation as a tool for redistributing income.
    Date: 2015–11
  4. By: Caroline de la Porte; Patrick Emmenegger
    Abstract: This Working Paper focuses on the impact of the directive on fixed-term work and the EU's Court of Justice (CJEU) case law concerning fixed-term work from 2007 and 2013. By doing so, this working paper develops an analytical framework to analyse the Europeanisation of labour law with an eye on the literature on labour-market dualisation.
    Keywords: Employment, EU legislation, Labour law
    Date: 2016–01

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