nep-iue New Economics Papers
on Informal and Underground Economics
Issue of 2017‒03‒05
four papers chosen by
Catalina Granda Carvajal
Universidad de Antioquia

  1. The Impact of Syrian Refugees on Natives' Labor Market Outcomes in Turkey: Evidence from a Quasi-Experimental Design By Evren Ceritoglu; Hatice Burcu Gurcihan Yunculer; Huzeyfe Torun; Semih Tumen
  2. Tariffs, FDI with technology transfer and welfare in segmented factor markets By Soumyatanu Mukherjee
  3. The Intergenerational Causal Effect of Tax Evasion: Evidence from the Commuter Tax Allowance in Austria By Wolfgang Frimmel; Martin Halla; Joerg Paetzold
  4. Informal loans, liquidity constraints and local credit supply: evidence from Italy By Michele Benvenuti; Luca Casolaro; Emanuele Ciani

  1. By: Evren Ceritoglu; Hatice Burcu Gurcihan Yunculer; Huzeyfe Torun; Semih Tumen
    Abstract: Civil conflict in Syria, started in March 2011, led to a massive wave of forced immigration from the Northern Syria to the Southeastern regions of Turkey, which later had serious economic/political repercussions on the MENA region and most of the Europe. This paper exploits this natural experiment to estimate the impact of Syrian refugees on the labor market outcomes of natives in Turkey. Using a difference-in-differences strategy, we find that immigration has somewhat affected the employment outcomes of natives, while its impact on wage outcomes has been negligible. We document some employment losses among informal workers as a consequence of refugee inflows. Formal employment increased slightly potentially due to increased social services in the region. The majority of those who lost their informal jobs have either left the labor force or remained unemployed. Formal employment and unemployment rates have increased, while labor force participation, informal employment, and job finding rates have declined among natives. Disadvantaged groups – i.e., women, younger workers, and less-educated workers – have been affected the most. The prevalence of informal employment in the Turkish labor markets has amplified the negative impact of Syrian refugee inflows on natives’ labor market outcomes. Overall, the impact of Syrian refugee inflows on the Turkish labor markets has been limited, which suggests that the potential costs on the European and other affected labor markets might also be limited.
    Keywords: Syrian civil conflict, Immigration, Turkey, Labor market, Informality, Difference in differences
    JEL: J15 J21 J46 J61 C21
    Date: 2017
  2. By: Soumyatanu Mukherjee (Indian Institute of Management Kozhikode)
    Abstract: This paper, using a three-sector full employment general equilibrium model with segmented domestic factor markets, shows that policy of import restriction using tariffs can be beneficial for a small, open developing economy compared to the policy of import liberalisation, opposite to the conventional results. Also inflows of foreign-owned capital to an export sector within the export processing zone (EPZ) of the economy coupled with labour-augmenting type technology transfer can lead to welfare amelioration, even without the existence of segmentation in labour market. So these seemingly counterintuitive theoretical results support recent empirical findings suggesting that trade restrictions can promote growth and attract FDI for the developing countries, even when foreign capital enters one specific export sector of the economy
    Keywords: Tariff; foreign capital; export processing zones; technology transfer; informal sector; economy
    JEL: F11 F16 F21
    Date: 2016
  3. By: Wolfgang Frimmel; Martin Halla; Joerg Paetzold
    Abstract: Does tax evasion run in the family? To answer this question, we study the case of the commuter tax allowance in Austria. This allowance is designed as a step function of the distance between the residence and the workplace, creating sharp discontinuities at each bracket threshold. The distance to these brackets is a strong determinant of compliance since it corresponds to the probability of detection. The match of different administrative data sources allows us to observe actual compliance behavior at the individual level across two generations. To identify the intergenerational causal effect in tax evasion behavior, we use the paternal distance-to-bracket as an instrumental variable for paternal compliance. We find that paternal noncompliance increases children’s non-compliance by about 20 percent.
    Keywords: Tax evasion, tax morale, intergenerational correlation, intergenerational causal effect.
    JEL: H26 A13 H24 J62 D14
    Date: 2017–01
  4. By: Michele Benvenuti (Bank of Italy); Luca Casolaro (Bank of Italy); Emanuele Ciani (Bank of Italy)
    Abstract: Using data from the Italian Survey on Household Income and Wealth from 1995 to 2014, we study the relation between informal credit (loans from relatives and friends) and a household's access to bank credit. While most of the literature has focused on the substitutability channel, we highlight that even households with full access to the formal credit market are more likely to be indebted to relatives or friends when compared to those not interested in formal loans. This complementarity is stronger for households who have problems paying back their loans, suggesting the presence of a caretaker effect on the part of relatives and friends towards distressed families. Finally, we estimate the overall impact of an expansion of local credit supply on the diffusion of informal loans, using an IV approach. The results suggest that the complementarity effect prevails, but the positive effect on informal loans is economically very small.
    Keywords: informal credit, local credit markets, inter vivos transfers
    JEL: D14 E21
    Date: 2017–02

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