nep-iue New Economics Papers
on Informal and Underground Economics
Issue of 2018‒04‒30
five papers chosen by
Catalina Granda Carvajal
Universidad de Antioquia

  1. Corporate governance, tax evasion and business cycles By Gilbert Mbaraa; Ryszard Kokoszczyński
  2. The effects of official and unofficial information on tax compliance By Filomena Garcia; Luca David Opromolla; Andrea Vezzulli; Rafael Marques
  3. Fading Out Effect or Long Lasting Nudge? The impact of a Conditional Cash Transfer Program Beyond Starting the School Year in Argentina By María Edo; Mariana Marchionni
  4. The value of formal titles to ownership in residential property transactions: Evidence from Kinondoni municipality Tanzania By Samwel Alananga
  5. Informe Sociolaboral del Partido de General Pueyrredon By GrET

  1. By: Gilbert Mbaraa (Faculty of Economic Sciences, University of Warsaw); Ryszard Kokoszczyński (Faculty of Economic Sciences, University of Warsaw, Narodowy Bank Polski)
    Abstract: We develop an agency model of corporate tax evasion and auditing by a residual claimant government and embed it to a macroeconomic environment characterised by credit constraints. In our economy, tax auditing by the government reduces the information asymmetry between lenders and entrepreneurs with an investment opportunity. Corporate governance quality consequently affects macroeconomic variables; with changes in tax rates, auditing and quality of corporate governance having aggregate effects. We show that changes in the revenue system; tax and audit rates, can directly affect asset prices and inflate the effects of exogenous shocks to the economy.
    Keywords: corporate governance, credit constraints, taxation, asset pricing, tax evasion, agency problem
    JEL: H2 H26 H3 E13 E26 J81
    Date: 2018
  2. By: Filomena Garcia (Indiana University, & UECE); Luca David Opromolla (Banco de Portugal, CEPR, CESifo, & UECE); Andrea Vezzulli (University of Insubria); Rafael Marques (ISEG-School of Economics and Management)
    Abstract: The administration of tax policy has shifted its focus from enforcement to complementary instruments aimed at creating a social norm of tax compliance. In this paper we provide an analysis of the effects of the dissemination of information regarding the past degree of tax evasion at the social level on the current individual tax compliance behavior. We build an experiment where, for given levels of audit probabilities, fines and tax rates, subjects have to declare their income after receiving either a communication of the official average tax evasion rate or a private message from a group of randomly matched peers about their tax behavior. We use the experimental data to estimate a dynamic econometric model of tax evasion. The econometric model extends the Allingham-Sandmo-Yitzhaki tax evasion model to include self-consistency and endogenous social interactions among taxpayers. We find four main results. First, tax compliance is very persistent. Second, the higher the official past tax evasion rate the higher the degree of persistence: evaders are more likely to evade again, and compliant individuals are more likely to comply again. Third, when all peers communicate to have evaded (complied) in the past, both evaders and compliant individuals are more likely to evade (comply). Fourth, while both treatments, and especially the unofficial information treatment, are associated, in the context of our experiment, with a significantly larger growth in evasion intensity, the aggregate effect depends on the characteristics of the population. In countries with inherently low levels of tax evasion, official information can have beneficial effects by consolidating the behavior of compliant individuals. However, in countries with inherently high levels of tax evasion, official information can have detrimental effects by intensifying the behavior of evaders. In both cases, the impact of official information is magnified in the presence of strong peer effects.
    Keywords: Tax morale, Information, Tax evasion, Experiment, Peer Effects
    JEL: H26 D63 C24 C92 Z13
    Date: 2018–04
  3. By: María Edo (UdeSA & CONICET); Mariana Marchionni (CEDLAS-FCE-UNLP & CONICET)
    Abstract: We estimate the impact on education outcomes of the Universal Child Allowance (AUH), a massive conditional cash transfer program targeted at young children of unemployed and informal workers launched in Argentina in late 2009. Evidence from previous works suggests that the AUH has had a significant positive impact on attendance rates at the beginning of the school year, but concentrated on boys in upper-secondary school. In this paper we study the effects on other education outcomes: intra-year dropout rates and primary school completion rates. We find that the AUH may be held responsible for significant improvements in both outcomes while the analysis highlights heterogeneous effects across age groups and gender. In particular, the AUH seems to have contributed to reduce intra-year dropout rates of eligible girls aged 12 to 14 (almost 4 p.p.) and 15 to 17 (7 p.p.) while no effects were found for children aged 6 to 11 or for boys, irrespective of age. The program seems to have also increased the probability of graduating from primary school of over-aged eligible children (1.4 p.p. for boys aged 12 to 14, almost 3 p.p. for girls in that age range and 2 p.p. for boys in the 15-17 age group). These results suggest that beyond the effects on school access indicators, the AUH may also contribute to the improvement of final outcomes in education. Nevertheless, the evidence also indicates that there is room for improvements in the design of the program aimed at enhancing these long term effects.
    JEL: I2 I3
    Date: 2018–04
  4. By: Samwel Alananga
    Abstract: Under property informality, perceptions on transaction failure risks at purchase can diversify the spectrum of possible prices depending on anticipated occupation strategies subsequent to purchase. Based on survey data on 1514 residential property owners from Kinondoni municipality, Dar es Salaam Tanzania, binomial logistic regression models were implemented to predict pre-purchase perceived transaction failure risks and mixed effect models were utilised to examine the effect of the predicted risks on (2010 constant) price of three-bedrooms finished and unfinished housing units and 400m2 plots. The results suggest that risk averse households pay on average around Tanzanian Shillings (Tshs) 349,000/= more to acquire formally titled residential properties than they would pay for similar but informal properties simply because of a lower perceived transaction failure risk for the former. Such lower perceived risk is however, unambiguously relevant only among "unfinished housing" purchasers. For "vacant plots" and "finished housing" units, a positive net risk-price premium is dependent on the anticipated occupation strategy subsequent to purchase. On average "frequent visitation" after purchase induces a higher risk-price premium over formal purchases for both "vacant plots" and "finished housing" units. A Legal title to a "vacant plots" has a small risk-price premium of around Tshs. 5,000/= over "effective occupation" for the same but a relatively higher risk-price discount for "frequently visited" plots among risk lovers yielding a positive net risk-price premium of around Tshs. 16,000/=. These marginal risk-price premiums for "vacant plots" suggest that informal and formally titled plots sale on average around the same price regardless of whether the purchaser is risk averse or otherwise. Formally titled "finished housing" is on average, purchased at a higher price but such premiums are limitedly associated with risk aversion suggesting that such premiums emanate from factors other than the use of formal titles in transactions.
    Keywords: Developing Countries; Housing transactions; Ownership titles; Price premiums; Transaction risks
    JEL: R3
    Date: 2017–07–01
  5. By: GrET
    Abstract: En esta nueva edición del Informe Sociolaboral del Partido de General Pueyrredon se analiza el impacto de las políticas económicas sobre mercado laboral local y nacional hasta el cuarto trimestre de 2017. El año cerró con una recuperación en el nivel de actividad económica respecto a 2016, que fue explicado fundamentalmente por la mejora en construcción (obra pública). Así, en el tercer y cuarto trimestre de 2017 el PBI es un 0,4% y un 2,8% respectivamente más elevado que en los mismos períodos de 2015. No obstante, más allá de esta recuperación en los indicadores de producto, la economía argentina afronta tensiones y desequilibrios (fiscal y externo) que amenazan la sustentabilidad del actual esquema macroeconómico. En este contexto, el mercado de trabajo de Mar del Plata manifiesta una aparente mejora, aunque oculta ciertas dinámicas que se iniciaron a mediados de 2016. En rigor, se exhibe un descenso de la tasa de desocupación (al 9,3%) y un incremento de la tasa de empleo (44,1%) que estuvo explicado principalmente por el menor número de jóvenes varones que buscaban trabajo y que ahora están empleados. Sin embargo, estos son quienes se habían quedado sin trabajo hace un año cuando más del 70% de los ocupados eran asalariados, y un porcentaje importante de mujeres había aumentado su participación. Ahora el trabajo en relación de dependencia disminuyó al 67,5% y un alto porcentaje (37,4%) continúa siendo trabajo no registrado, por ende, las ocupaciones creadas distan de ser de calidad.
    Keywords: Actividad Económica; Política Económica; Mercado de Trabajo; Precarización Laboral; Desempleo; Mar del Plata; Batán; Partido de General Pueyrredon;
    Date: 2018–03

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