nep-iue New Economics Papers
on Informal and Underground Economics
Issue of 2017‒01‒29
three papers chosen by
Catalina Granda Carvajal
Universidad de Antioquia

  1. Using Internal and External Sources of Information to Reduce Customs Evasion By Cyril CHALENDARD
  2. Expanding Universal Health Coverage in The Presence of Informality in Indonesia: Challenges and Policy Implications By Teguh Dartanto; Jahen Fachrul Rezki; Usman; Chairina Hanum Siregar; Hamdan Bintara; Wahyu Pramono
  3. Demonetisation: Some Theoretical Perspectives By Waknis, Parag

  1. By: Cyril CHALENDARD
    Abstract: This paper aims to identify some factors that reduce evasion of customs duties in developing countries. Following the recent literature on customs evasion, we proxy customs fraud by discrepancies in bilateral trade statistics. Estimates first show that the more frequently a product is imported, the more customs fraud reduces. We argue that this result is indicative of the fact that customs officers use what they have learned from similar import declarations - use customs' internal information - to better assess the compliance of declarations. Then, we show that relying on an information provider - a pre-shipment inspection company in our case - seems to increase tax enforcement. Results indicate that pre-shipment inspections significantly reduce observed discrepancies in trade statistics. In line with previous studies, we find that the semi-elasticity of evasion increases with the tax rate. Finally, estimates confirm that enforcement is product-varying. Results are robust to various robustness checks.
    Keywords: Use of internal information, External Information acquisition, Customs enforcement, Tax evasion, Pre-shipment inspections.
    JEL: O17 F13 K42 H83 H26
    Date: 2017–01
  2. By: Teguh Dartanto; Jahen Fachrul Rezki; Usman; Chairina Hanum Siregar; Hamdan Bintara; Wahyu Pramono (LPEM, Faculty of Economics and Business, University of Indonesia)
    Abstract: The implementation of national health insurance in Indonesia since 2014 has brought out the missing middle problem in which the non-poor informal sectors have remained uncovered from the health care due to self-enrollment. Therefore, achieving UHC in Indonesia will take a long process, especially when the proportion of non-poor informal sector in total population is large enough. This study aims at examining three main issues that may have become obstacles for informal sectors to join the program: (1) observing supply side readiness, (2) examining affordable premium and willingness to pay of informal sectors, and (3) exploring why informal workers have been reluctant to join the national health insurance. This study reports that around 53.7% of Sub National Government (SNG) faced a shortage of health facilities of 59,387 beds, though in some regions had surplus of beds (per 1000 people). This study also finds that a single premium for all over Indonesia is unfair and unaffordable for some people living in eastern part of Indonesia. Observing 400 households working in informal sectors and applying Triple Bounded Dichotomies Choice Contingent Valuation Method (TCCVM) to observe the Willingness to Pay (WTP), this study finds that around 70% of respondents had the desire to join the health insurance, but their willingness to pay of the premium was lower than the current rate. The current premium seemed less affordable for informal sectors; thus, this created a barrier for them to enthusiastically join the new health insurance program. Our econometric estimations confirm that availability of hospital, insurance literacy, experiences of inpatients and outpatients, number of family member, sex of head of household, access to internet and household income are highly correlated to the likelihood of informal sectors joining the national health insurance (NHI). Moreover, in contrast with findings from many other studies, the insurance premium is surprisingly not the main reason for informal sectors to join the program; rather, the main obstacle is the lack of insurance literacy. Consequently, the necessary condition for mandating informal sectors to join the program is an improvement of insurance literacy, while the sufficient conditions are supply-side readiness and affordable premium. This study calls for a massive campaign to educate the public about the importance of health insurance.
    Keywords: Returns to Scale
    JEL: H40
    Date: 2015–11
  3. By: Waknis, Parag
    Abstract: On November 8, 2017, the Prime Minister of India Narendra Modi declared currency denominations of Rs.500 and Rs.1000 to be illegal for use in transactions. These currency denominations together constituted almost 85% of total currency in circulation according to some estimates. Based on essentiality of money, and a segmented markets model perspective, I analyze the effects of this surprise demonetisation policy on the Indian economy.
    Keywords: demonetisation, essentiality of money, segmented markets, informal economy.
    JEL: E42 E51 E52
    Date: 2017–01–23

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