nep-iue New Economics Papers
on Informal and Underground Economics
Issue of 2016‒02‒12
five papers chosen by
Catalina Granda Carvajal
Universidad de Antioquia

  1. Informal Labour Markets in Pakistan By M. Ali Choudhary; Saima Mahmood; Gylfi Zoega
  2. On Estimating the Size of the Shadow Economy By Kirchgässner, Gebhard
  3. The Effect of Competition on Tax Compliance: The Role of Audit Rules and Shame By Alberto Casagrande; Daniela Di Cagno; Alessandro Pandimiglio; Marco Spallone
  4. A More Precise Approach to Fiscal Consolidation and Sustainability By Sérgio Afonso
  5. Le contrôle fiscal de la TVA By Paulin Ibanda Kabaka

  1. By: M. Ali Choudhary (State Bank of Pakistan); Saima Mahmood (University of Iceland); Gylfi Zoega (University of Iceland; Birkbeck, University of London)
    Abstract: This paper describes the results of a survey of informal-sector firms in Pakistan. Firms belong to the informal sector mainly because of scarce financial resources. There are significant differences in the level of wages and the flexibility of wages with the informal sector having both lower wages and greater flexibility than the formal sector. While minimum wages are less binding in the informal sector, indexation of wages to inflation is more common. In spite of these differences the reasons for not cutting wages in a recession are similar between the two sectors.
    Keywords: Informal sector, wage setting, wage rigidity.
    JEL: E24 E26 J31
    Date: 2015–09
  2. By: Kirchgässner, Gebhard
    Abstract: As long as it is employed cautiously enough, the model approach is a useful tool to estimate simultaneously the size and the development of the shadow economy in several countries. However, a second method is necessary to calibrate the model. The currency demand approach can lead to highly implausible results; the size of the shadow economy might be largely overestimated. An alternative is the survey method. For real tests of whether a variable has an impact, procedures are necessary that do not use the same variables as those used to construct the indicator. Thus, to make progress in analysing the shadow economy, the model approach has a role to play, but it has to be complemented by other methods employing different data. The currency demand approach cannot be used as long as it employs the same variables for its constructions
    Keywords: Shadow Economy, Model Approach, Currency Demand Approach, Survey Methods, Tax Burden, Testing, Plausibility Tests
    JEL: O17 C18
    Date: 2016–02
  3. By: Alberto Casagrande; Daniela Di Cagno; Alessandro Pandimiglio; Marco Spallone
    Abstract: Traditional models of tax enforcement assume that the decision to be tax compliant is the result of an interaction between individual taxpayers and a dedicated tax agency. Evidence shows that tax compliance is the result of a far more complex decision rule, involving both individual and group motivations, along with non-monetary components. In this paper, we consider a game in which the individual decision to be tax compliant is affected both by strategic competition between taxpayers and the psychological cost of being detected (i.e., shame). We ran a laboratory experiment using a sample of 138 students at the Centro di Economia Sperimentale A Roma Est (CESARE), in the experimental lab at the LUISS “Guido Carli†University of Rome, to evaluate the efficiency of random versus targeted audit rules and to verify the interaction between strategic competition and shame. The experimental results show that strategic competition between taxpayers plays a critical role in reducing tax evasion. In addition, shame reinforces this competition, but plays no significant role on its own (i.e., without competition).
    Keywords: Tax evasion, Lab Experiment, Shame, Competition
    JEL: H26 C91 C72
  4. By: Sérgio Afonso (Independent)
    Abstract: This paper argues that austerity is not a good solution for fiscal consolidation and sustainability. Therefore, it is imperative to find a new approach. This paper presents a mechanism to improve both tax compliance and fiscal sustainability.
    Keywords: fiscal consolidation, fiscal sustainability, formalization
    Date: 2016–01–27
  5. By: Paulin Ibanda Kabaka (LAM - Les Afriques dans le monde - CNRS - Centre National de la Recherche Scientifique - Sciences Po)
    Abstract: Cet article présente de façon sommaire les aspects afférents au contrôle fiscal de la TVA afin d'en assurer un bon rendement et de décourager les tentatives de fraude fiscale.
    Keywords: TVA, contrôle fiscal, fiscalité, fraude fiscale, impôt,droit fiscal
    Date: 2016–02

This nep-iue issue is ©2016 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.