nep-iue New Economics Papers
on Informal and Underground Economics
Issue of 2017‒10‒22
seven papers chosen by
Catalina Granda Carvajal
Universidad de Antioquia

  1. The Ghost of Institutions Past: Tax Evasion and Asymmetric Path Dependence By Koch, Christian; Nikiforakis, Nikos; Kamm, Aaron
  2. How Do Entrepreneurial Portfolios Respond to Taxation? By Frank Fossen; Ray Rees; Davud Rostam-Afschar; Viktor Steiner
  3. Measurement of earnings: Comparing South African tax and survey data By Martin Wittenberg
  4. How Taxing Is Tax Filing? Using Revealed Preferences to Estimate Compliance Costs. By Youssef Benzarti
  5. The dynamics of income inequality in a dualistic economy - Malawi By Giovanni Andrea Cornia and Bruno Martorano; Bruno Martorano
  6. Active Labour Market Programmes in Latin America and the Caribbean: Evidence from a Meta Analysis By Escudero, Veronica; Kluve, Jochen; Mourelo, Elva López; Pignatti, Clemente
  7. Steuerbetrug im Rahmen von Overseas E-Commerce als gesetzgeberische Aufgabe - Verbesserung der Kontrolle und Vereinfachung der Compliance - By Brettschneider, Jörg

  1. By: Koch, Christian; Nikiforakis, Nikos; Kamm, Aaron
    Abstract: In this study, we present evidence from a novel tax experiment featuring multiple equilbria. In the field, countries such as Greece seem to be stuck in a bad equilibrium with persistent high tax evasion while countries such as Germany seem to be in good equilibrium with persistent high compliance. Relatedly, our setting enables us to study our lab societies’ initial equilibrium selection and to what extent their compliance level is path dependent, i.e. depends on historical experience.
    JEL: C92 H26
    Date: 2017
  2. By: Frank Fossen; Ray Rees; Davud Rostam-Afschar; Viktor Steiner
    Abstract: We investigate how personal income taxes affect the portfolio share of personal wealth that entrepreneurs invest in their own business. In a reformulation of the standard portfolio choice model that allows for underreporting of private business income to tax authorities, we show that a fall in the tax rate may increase investment in risky entrepreneurial business equity at the intensive margin, but decrease entrepreneurial investment at the extensive margin. To test these hypotheses, we use household survey panel data for Germany eliciting the personal wealth composition in detail in 2002, 2007, and 2012. We analyze the effects of personal income taxes on the portfolio shares of six asset classes of private households, including private business equity. In a system of simultaneous demand equations in first differences, we identify the tax effects by an instrumental variables approach exploiting tax reforms during our observation period. To account for selection into entrepreneurship, we use changes in entry regulation into skilled trades. Estimation results are consistent with the predictions of our theoretical model. An important policy insight is that lower taxes drive out businesses that are viable only due to tax avoidance or evasion, but increase investment in private businesses that are also worthwhile in the absence of taxes.
    Keywords: taxation, entrepreneurship, portfolio choice, investment
    JEL: H24 H25 H26 L26 G11
    Date: 2017
  3. By: Martin Wittenberg (Southern Africa Labour and Development Research Unit, School of Economics, DataFirst, University of Cape Town)
    Abstract: Comparing earnings in the tax assessment data to those in the QLFS, it appears that earnings of employees in the QLFS are underreported by perhaps 40%, with bigger gaps near the top of the distribution. Benefits and annual bonuses contribute substantially to the gap. In the case of self-employment incomes it is also the case that high earnings are missing or underreported in the QLFS, but the tax data seems to miss many mid- and low-income self-employed earners. These differences make sense when one considers the incentives for reporting accurately to SARS versus to Statistics South Africa. These errors mean that earnings inequality as measured by the Gini coefficient is probably underestimated in the surveys by three percentage points.
    Date: 2017
  4. By: Youssef Benzarti
    Abstract: This paper uses a quasi-experimental design and a novel identification strategy to estimate the cost of filing income taxes. First, using US income tax returns, I observe how taxpayers choose between itemizing deductions and claiming the standard deduction. Taxpayers forgo tax savings to avoid compliance costs, which provides a revealed preference estimate of the compliance cost of itemizing. I find that this cost increases with income, consistent with a higher opportunity cost of time for richer house- holds. Second, using my estimates and estimates of the time required to file other schedules, I estimate the cost of filing federal income taxes. I find that this cost has been increasing since the 1980’s and has reached 1.2% of GDP in the most recent years.
    JEL: H24 H31 H83
    Date: 2017–10
  5. By: Giovanni Andrea Cornia and Bruno Martorano (University of Florence); Bruno Martorano (University of Florence)
    Keywords: inequality; africa; inclusive growth; poverty
    JEL: O13 Q18 O32
    Date: 2017–07
  6. By: Escudero, Veronica (ILO International Labour Organization); Kluve, Jochen (Humboldt University Berlin, RWI); Mourelo, Elva López (ILO International Labour Organization); Pignatti, Clemente (ILO International Labour Organization)
    Abstract: We present a systematic collection and assessment of impact evaluations of active labour market programmes (ALMP) in Latin America and the Caribbean (LAC). The paper delineates the strategy to compile a novel meta database and provides a narrative review of 51 studies. Based on these studies, the quantitative analysis extracts a sample of 296 impact estimates, and uses meta regression models to analyse systematic patterns in the data. In addition to analysing earnings and employment outcomes as in previous meta analyses, we also code and investigate measures of job quality, such as the effects on hours worked and formality. We find that ALMPs in LAC are particularly effective in increasing the probability of having a formal job, compared to other outcomes. Our results also show that training programmes are slightly more effective than other types of interventions. Moreover, when looking at the sample of training programmes alone, we observe that formal employment is also the outcome category that is most likely to be impacted positively by these programmes. In terms of targeting, we find that ALMPs in the region work better for women than for men, and for youth compared to prime-age workers. Finally, medium-run estimates are not more likely to be positive than short-run estimates, while programmes of short duration (4 months or less) are significantly less likely to produce positive effects compared to longer interventions.
    Keywords: active labour market program, Latin America and the Caribbean, employment, informality, impact evaluation, meta analysis
    JEL: J08 J24 O54
    Date: 2017–09
  7. By: Brettschneider, Jörg
    Abstract: Eine Vielzahl von Händlern aus Drittländern (insbesondere aus der V. R. China) bieten Waren auf E-Commerce-Plattformen wie Amazon und eBay zum Verkauf an. Es kommt in diesem Zusammenhang zu Abgabenhinterziehungen großen Ausmaßes mit der Nebenfolge von Wettbewerbsverzerrungen. Es wird die Frage behandelt, welche Schritte die Bundesrepublik Deutschland unter Beachtung des EU-Rahmens dagegen unternehmen kann. Es sind einerseits rechtliche Voraussetzungen zur Verbesserung der Kontrolle zu schaffen und andererseits ist die Compliance zu erleichtern.
    Keywords: Amazon,eBay,China,Abgabenhinterziehungen,Mehrwertsteuerhinterziehungen,E-Commerce,Internetplattformen,Steuerbetrug,Steuerhinterziehung,Compliance,VAT-fraud,VAT,Umsatzsteuer,Mehrwertsteuer,Overseas E-Commerce,Overseas Warehouse,FBA,Fulfillment,Zoll,B2C
    Date: 2017

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