nep-iue New Economics Papers
on Informal and Underground Economics
Issue of 2017‒01‒08
six papers chosen by
Catalina Granda Carvajal
Universidad de Antioquia

  1. Production versus revenue efficiency with limited tax capacity: theory and evidence from Pakistan By Michael Carlos Best; Anne Brockmeyer; Henrik Jacobsen Kleven; Johannes Spinnewijn; Mazhar Waseem
  2. Corporate Income Tax Compliance Costs and their Determinants: Evidence from Greece By Stamatopoulos, Ioannis; Hadjidema, Stamatina; Eleftheriou, Konstantinos
  3. Unintended consequences of unemployment insurance legislation: evidence from Brazi By Cristiano Costa Carvalho; Renata Narita
  4. Formal but less equal: Gender wage gaps in formal and informal jobs in Brazil By Ben Yahmed, Sarra
  5. Evasión tributaria en las rentas del trabajo: evidencia de la Encuesta Nacional de Hogares By Lahura, Erick
  6. Estimating the Willingness to Pay for Tenure Security in Brazilian Favelas By Julie Litchfield; Caio Piza

  1. By: Michael Carlos Best; Anne Brockmeyer; Henrik Jacobsen Kleven; Johannes Spinnewijn; Mazhar Waseem
    Abstract: To fight evasion, many developing countries use production-inefficient tax policies. This includes minimum tax schemes whereby firms are taxed on either profits or turnover, depending on which tax liability is larger. Such schemes create nonstandard kink points, which allow for eliciting evasion responses to switches between profit and turnover taxes using a bunching approach. Using administrative data on corporations in Pakistan, we estimate that turnover taxes reduce evasion by up to 60–70 percent of corporate income. Incorporating this in a calibrated optimal tax model, we find that switching from profit to turnover taxation increases revenue by 74 percent without reducing aggregate profits.
    JEL: J1 M40 E6
    Date: 2015–10–30
  2. By: Stamatopoulos, Ioannis; Hadjidema, Stamatina; Eleftheriou, Konstantinos
    Abstract: This paper examines the corporate income tax compliance costs and their determinants by analyzing survey and financial statements data from firms operating in Greece. We find that corporate tax compliance costs are of considerable size and vary with several firm-specific characteristics, including the firm’s size, its age, the sector in which it operates, its location and its legal form. The paper intends to raise awareness regarding the impact of tax compliance costs, especially for countries, such as Greece, that were significantly affected by the economic and financial crisis.
    Keywords: corporate taxes; compliance costs; Greece
    JEL: H25 M21
    Date: 2016–12–21
  3. By: Cristiano Costa Carvalho; Renata Narita
    Abstract: The aim of this study is to investigate whether the probability of Brazilian formal workers being laid-off increases when they are elegible to receive the unemployment insurance. Using the Brazilian Monthly Employment Survey for the largest metropolitan regions, we estimate the e↵ect of a change in the law on the probability of lay-o↵ for the workers eligible to the benefit. The results point out to a 6,8% rise in this probability in comparison to the non-eligible workers.
    Keywords: unemployment insurance; unemployment; informality; labor legislation.
    JEL: J2 J38 J4 J6
    Date: 2016–12–07
  4. By: Ben Yahmed, Sarra
    Abstract: In developing countries, a large share of employees work informally and are not covered by employment protection legislation. I study here how gender wage inequality differs across formal and informal jobs in Brazil. The raw gender wage gap is higher in informal jobs (13%) compared to formal jobs (5%), but I show that this difference is an artefact of different male and female selection processes. First, women have better observable characteristics than men and the female advantage is stronger among formal employees. Second, men and women entering formal and informal jobs have different unobservable characteristics. Controlling for endogenous selection into formal vs. informal jobs, I find that the gender gap in wage offers is high and increases with education in formal jobs. In informal jobs, however, estimated wage offers are the same for men and women. I discuss the potential implications of these findings regarding the effect of labour market regulation on gender wage gaps.
    Keywords: gender wage gaps,informality,selection into work statuses,Brazil
    JEL: J31 O17
    Date: 2016
  5. By: Lahura, Erick (Banco Central de Reserva del Perú)
    Abstract: Se estima la evasión tributaria de las personas naturales que percibieron rentas del trabajo durante el periodo 2009-2015. Para ello, se estima la recaudación potencial a partir de los ingresos reportados en la Encuesta Nacional de Hogares (ENAHO), y se compara con la recaudación efectiva reportada por la Superintendencia Nacional de Aduanas y de Administración Tributaria (Sunat). Los resultados muestran una tendencia decreciente en las tasas de evasión tributaria de los trabajadores independientes y dependientes. Sin embargo, se observa que las tasas de evasión podrían estar subestimadas.
    Date: 2016–12
  6. By: Julie Litchfield (Department of Economics, University of Sussex); Caio Piza (Development Impact Evaluation Unit, World Bank Research Group)
    Abstract: This paper examines willingness to pay for housing tenure security in favelas in six Brazilian states, Ceara, Paraiba, Pernambuco and in the north-east, Minas Gerais and Sao Paulo in the south-east, and Rio Grande do Sul in the south, using data from the national household survey (Pesquisa Nacional por Amostra de Domicilios, PNAD) for 2002. We use a quasi-experimental technique by combining the inverse probability weighting estimator proposed by Hirano and Imbens (2001) with an interval regression model to shed light on what might be seen as the effect of title ownership on housing values in Brazilian favelas once selection on observed characteristics are controlled for. We also use state fixed effects to control for idiosyncratic characteristics of states. We interpret the resulting estimate in the same vein as Friedman et al (1988) as an estimate of the willingness to pay for tenure security. As far as we know, this is the first attempt at estimating willingness to pay for tenure security in Brazilian favelas. Our results suggest that people living in favelas are willing to pay on average an additional 18% of the value of their house for tenure security. However we find that among the poor willingness to pay for tenure security is substantially less, and for some disappears entirely. We suggest that this may be either because households in smaller and longer established favelas may have developed informal mechanisms to ensure their security or because the poor are skeptical about the real security the title represents in that environment. We argue that these estimates are useful for public policy in Brazil, where millions of households live in informal dwellings and interventions involving land regularization do not appear to account for households’ willingness to pay. We also simulate the likely cost of a titling programme and the consequences for household debt burdens.
    Keywords: urban housing; housing demand; tenure security; informal settlements; slums; poverty; welfare
    JEL: I30 O18 R21
    Date: 2017–01

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