nep-iue New Economics Papers
on Informal and Underground Economics
Issue of 2017‒11‒12
five papers chosen by
Catalina Granda Carvajal
Universidad de Antioquia

  1. Informality and Productivity: The Role of Unemployment Insurance Schemes By Cirelli, Fernando; Espino, Emilio; Sanchez, Juan M.
  2. Employment Vulnerability in Cameroon's Private Sector By Njang Vera Anweh; Ndamsa Dickson Thomas
  3. The Impact of Economic Globalization on the Shadow Economy in Egypt By Mohammad Reza Farzanegan; Mai Hassan
  4. Financial development in Africa - a critical examination By Asongu, Simplice
  5. Taxonomía de la informalidad en América Latina By Cristina Fernández; Leonardo Villar

  1. By: Cirelli, Fernando; Espino, Emilio; Sanchez, Juan M.
    Abstract: We study the design of optimal unemployment protection schemes to evaluate its impact on labor markets, welfare and productivity. We consider a life-cycle economies with formal and informal labor markets, unobservable effort to find and keep formal jobs, and unobservable heterogeneities across worker to find better formal jobs. We analyze the first best allocation to compare with the allocations stemming from the implementation of two alternative schemes: (i) a simple unemployment insurance system with a defined profile of unemployment benefits; (ii) an unemployment insurance saving account scheme parameterized by a replacement rate, an initial contribution to the saving account, a minimum level of savings at which the payment is suspended, and a maximum level of savings at which the contributions are suspended. Our quantitative analysis makes clear that both schemes can have a significant impact on welfare and productivity. Two additional lessons can be learned. First, no scheme is necessarily better in both economies. Second, a reform that implements an scheme that it is welfare improving does not necessarily boost productivity and viceversa.
    Keywords: Economía, Investigación socioeconómica, Trabajo y protección social, Desempleo,
    Date: 2017
  2. By: Njang Vera Anweh; Ndamsa Dickson Thomas
    Abstract: This study aims to empirically investigate the distribution, sources, and consequences of employment vulnerability among private sector workers across subgroups in Cameroon. We construct an employment vulnerability index using the 2005 and 2010 Cameroon employment and informal sector surveys (EES I and II). Results indicate that, in terms of employment vulnerability, the youths, the informal sector, the female, and the other cities (except Yaoundé or Douala) dominate the adult, the formal sector, the male and the labour force in Yaoundé and Douala, respectively. The incidence of employment vulnerability among the private sector labour force increased between 2005 and 2010. Interestingly, we found that the responsiveness of private sector income to an increase in employment vulnerability witnessed a drop between 2005 and 2010 in the private sector, across gender and age group. Our results showed that people without tertiary education and those in rural areas are exposed to vulnerable employment. We found that formal sector employment correlates negatively with employment vulnerability. Employment vulnerability generally reduces monthly income in the private sector. The effect of employment vulnerability on income is gender neutral, but adults register more adverse effects of employment vulnerability on income than the youths. These results have implications for upgrading the skills, with emphasis on the rural areas, adults and female workers in the fight against employment vulnerability. The results also highlight the role that formalization of large informal sector may play in alleviating employment vulnerability.
    Date: 2017–04
  3. By: Mohammad Reza Farzanegan; Mai Hassan
    Abstract: This study examines the economic globalization and the shadow economy nexus in Egypt. Using time series data from 1976 to 2013, the impulse response analysis shows that the response of the shadow economy in Egypt to positive shocks in economic globalization is negative and statistically significant for the first three years following the shock. This finding is obtained by controlling for several intermediary channels in globalization-shadow economy nexus such as education, government spending, industrial production, and labor force participation. Our results show the importance of promoting economic globalization by reducing the costs of doing business and trade in dealing with sizable shadow economy in Egypt.
    Keywords: shadow economy, globalization, VAR model, impulse responses, Egypt
    JEL: C53 F15 F40 O53
    Date: 2017
  4. By: Asongu, Simplice
    Abstract: The thesis summarises eight published articles for my doctoral degree research project. Individually the published articles coherently present a critical examination of financial development in Africa. Three main shortcomings in the literature have motivated the project: limited studies on stock market development in spite of the need for more sources of long-term finance; the absence of literature that engages the exposure of financial systems in Africa to recent global crises and a mainstream definition of the financial system that is not relevant to the continent because it fails to incorporate the informal financial sector. The highlighted gaps are addressed in three main themes. The main results of the first theme are twofold. Political, economic and institutional governance can play a positive role in the performance of African stock markets. There is urgent need for the improvement of cross-country characteristics that enhance convergence for the performance of stock markets. Findings of the second theme are as follows. There is absence of convergence among member states of the CFA franc zones. Limited financial dynamics can be used in monetary policy to exert deflationary pressures in periods of soaring consumer prices. There is very moderate evidence supporting the hypothesis of thresholds in financial development for financial globalisation benefits. A new definition of the financial system in the third theme has also led to some interesting results. Liberalisation policies have broadly promoted the informal financial sector to the detriment of the formal sector. An example of such liberalisation is the information and communication technology sector, which has led to mobile phone penetration being positively (negatively) correlated with the informal (formal) financial sector. In another example, not all financial intermediary channels are pro-poor for the effectiveness of liberalisation policies in enhancing investment for inequality mitigation. Policy implications, research limitations and future research directions are discussed.
    Keywords: Finance; Economic Development; Africa
    JEL: G20 G29 L96 O40 O55
    Date: 2015–12–18
  5. By: Cristina Fernández; Leonardo Villar
    Abstract: El análisis de la informalidad en América Latina es complejo, no sólo por la dificultad para homologar conceptos y mediciones; sino también por divergencias en el tipo de informalidad que enfrentan los países. Mientras que, en algunos países como Chile y México, la informalidad tiende a ser el resultado de una decisión; en países como Colombia y Perú hay muchos trabajadores que son informales porque no cuentan con ninguna alternativa de trabajo, debido a su baja productividad o a las altas barreras de entrada al sector formal. Identificar la composición de la informalidad es fundamental a la hora de realizar recomendaciones de política para cada país. El aporte principal de este trabajo consiste en: (i) compatibilizar algunas cifras y conceptos del mercado laboral y generar una medida homogénea de informalidad, a partir de las encuestas de hogares de algunos países de América Latina (Perú, Colombia, Brasil, México, Argentina, Uruguay y Chile); (ii) estimar, en la medida de lo posible, y caracterizar la composición de la informalidad de acuerdo a los criterios establecidos por Fernández, Lilenstein, Oothusien y Villar (2016) para los países seleccionados y para el agregado de estos países, y (iii) analizar la pertinencia y efectividad de las políticas de formalización que se han implementado recientemente a la luz de esta taxonomía.
    Keywords: Informalidad, América Latina, Recomendaciones de política
    JEL: J21 J68 I24
    Date: 2017–10–31

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