nep-iue New Economics Papers
on Informal and Underground Economics
Issue of 2018‒05‒28
eleven papers chosen by
Catalina Granda Carvajal
Universidad de Antioquia

  1. Linking Beneficial Ownership Transparency to Improved Tax Revenue Collection in Developing Countries By Prichard, Wilson
  2. Tax reform to support growth and employment in Finland By Christophe André; Hyunjeong Hwang
  3. Norms, Power, and the Socially Embedded Realities of Market Taxation in Northern Ghana By Prichard, Wilson; van den Boogaard, Vanessa
  4. The Dynamics of Informal Employment in Urban China By Deng, Quheng; Ma, Xinxin
  5. The Migrant Smuggling Crime in Romania By Nicoleta-Elena Buzatu
  6. An Offer that you Can't Refuse? Agrimafias and Migrant Labor on Vineyards in Southern Italy By Stefan Seifert; Marica Valente
  7. Does access to formal finance matter for stimulating entrepreneurship in developing countries? Evidence from non-farm entrepreneurial activities in Nigeria By Olabimtan Adebowale and David Lawson
  8. From ‘international’ to ‘global’ development in the UK? Recent evidence from political party manifestos By David Hulme and Eleni Sifaki
  9. Los trabajadores en el sector informal y los programas de seguridad social contributiva ? el caso de Tanzania By Flora Myamba
  10. La maternidad y el empleo formal en Colombia By Julio E. Romero Prieto
  11. Elementos para una propuesta de reforma del sistema de protección económica para la vejez en Colombia By Leonardo Villar; David Forrero

  1. By: Prichard, Wilson
    Abstract: Recent years have witnessed an accelerating push to expand access to information on the beneficial ownership of corporate entities, in an effort to bring greater transparency to multinational corporation (MNC) tax strategies, identify personal tax-evading wealth held overseas and combat global networks of criminality and corruption. This effort remains in its infancy, but has made important strides: the G20 has called for all countries to develop and share registers of beneficial ownership, and various jurisdictions have begun to do so.
    Keywords: Governance,
    Date: 2018
  2. By: Christophe André (OECD); Hyunjeong Hwang (OECD)
    Abstract: Finland raises a large amount of taxes to finance high-quality public services and redistribute income. Public finances are currently relatively solid and taxes and transfers reduce income inequality significantly. However, a rapidly ageing population pushes up public spending, while globalisation creates challenges in raising revenue. Hence, ensuring long-term fiscal sustainability requires both containing spending through efficiency gains in the provision of public services and raising revenue in a way that minimises deadweight costs and distortions weighing on growth and employment. Reducing further the tax wedge on labour income would lift employment. More revenue could be raised through a reduction in the range of goods and services subject to reduced VAT rates, higher taxes on consumption that is harmful to the environment or health and higher property taxes. A competitive corporate taxation, combined with international cooperation to avoid base erosion and profit shifting, is needed to foster local production.
    Keywords: corporate income tax, environmental taxation, Finland, personal income tax, subsidies, tax evasion, taxation
    JEL: H23 H24 H25 H26
    Date: 2018–05–29
  3. By: Prichard, Wilson; van den Boogaard, Vanessa
    Abstract: This article provides a ground-level view of market taxation in two local government areas in Ghana’s relatively disadvantaged northern region. It describes a system shaped by informal practices that are grounded in social relationships and collective norms, which sometimes foster greater equity and in other cases serve to reinforce existing inequalities. The evidence suggests the need for a more nuanced understanding of the highly informal and socially embedded realities of local tax collection, and the possibility that improved outcomes could be achieved by “working with the grain†of these inescapable local realities, while seeking to minimize potential costs of informality.
    Keywords: Governance,
    Date: 2017
  4. By: Deng, Quheng; Ma, Xinxin
    Abstract: Utilizing the rotating panel data based on the Urban Household Surveys from 2002 to 2007 conducted by National Bureau of Statistics of China , this study investigates the dynamics of informal employment in urban China. It is found that the proportion of informal employment to the total employment increases continuously from 2002 to 2007. Transition rates between the informal and formal employment status indicate the probability of persistence in the informal employment is great. To consider that there may exists spurious state dependence which may overestimate the persistence in informal employment, this study utilizes the random-effects dynamic probit models to address the unobserved heterogeneity problem, and deals with the initial condition problem and the serial correlation of transitory shocks. Based on these regression results, this study disentangles the genuine from spurious state dependence. It is found that the genuine state dependence accounts for the majority of the persistence in informal employment. Genuine state dependence patterns for various subgroups are also examined.
    Keywords: dynamics, informal employment, persistence, spurious state dependence, genuine state dependence
    Date: 2018–05
  5. By: Nicoleta-Elena Buzatu (Dimitrie Cantemir Christian University)
    Abstract: The study below is meant to focus on the migrant smuggling crime in Romania, in specially analysis of the migrant smuggling infraction provided in the Romanian Criminal Code. Being a component of the human trafficking activity, the illegal migration is a phenomenon that is continuously extending and harder to stop due to the involvement of the organized crime networks and also due the ingenuousness and maliciousness of the people and the criminals. Therewith, the migrant smuggling is highly connected with drug trafficking, terrorism etc., aspects that are connected with the organized crime. Legally, there are many differences between the source states, the transit states or the destination states, that is slowing the fight of the states for combating this scourge. During this fight of preventing and stopping the illegal migrant smuggling, the states that are involved aligned their own legal frame to the international one in the activity field, by elaborating and promoting the regulatory acts that have been putting the responsibility on the governmental and non-governmental institution in this activity field.
    Keywords: migrant, illegal migration, crime, organized crime, Romanian Criminal Code
    Date: 2018–04
  6. By: Stefan Seifert; Marica Valente
    Abstract: In the 2011 post-Arab Spring migration wave, over 64,000 migrants landed on the southern Italian coast, with many of them potentially working illegally on farms through caporalato, a widespread system of illegal recruitment of underpaid farm labor run by Italian agrimafias. To test this hypothesis, this paper evaluates the causal effects of the 2011 migration wave on reported labor productivity focusing on vineyards in southern Italy. Based on a dynamic panel data model, labor productivity is estimated to increase by about 11% on average for 2011 and 2012. We show that this corresponds to a total of around 10 million unreported work hours, or 21,000 full-time employees, in each year. We interpret this as an increase in employment of illegal workforce due to the migration wave. Magnitude, direction, and statistical significance of the effect are confirmed under various model specifications and using synthetic control and post-lasso approaches.
    Keywords: Migration wave, agrimafias, illegal employment, vineyard productivity
    JEL: F22 J61 J43
    Date: 2018
  7. By: Olabimtan Adebowale and David Lawson
    Abstract: Abstract The role of finance in stimulating entrepreneurship in developing countries is well documented. However, the specific impact of finance on part-time entrepreneurship is less well known. Drawing on the entrepreneurship discourse that self-employment is not a sufficient measure of entrepreneurship in developing countries, this study extends the finance–poverty debate by investigating the impact of finance on households’ part-time and self-employed entrepreneurship choices. It also examines the role of external finance in enterprise growth, with a focus on the ‘missing lower-end’ of the industrial scale. Using Nigeria Living Standard Measurement Study (LSMS) surveys, our analysis suggests heterogeneity in the effects of finance on households’ non-farm entrepreneurial choices, with part-time entrepreneurs more likely to be financially constrained. The empirical evidence shows that self-employed entrepreneurs are seemingly not financially constrained. This is, however, not to say that self-employed entrepreneurs are not financially constrained; it may just be that they are concentrated in the informal sector or less capital-intensive sectors of the economy. The results also show that, contrary to findings in previous studies, external finance does not strongly explain household enterprise growth. The results are robust to the use of an alternative econometric approach on identical models and specifications. The policy implication is that improving access to formal financial services may not, on its own, be sufficient to drive the structural transformation process without the integration of the informal financial sector into the mainstream financial system.
    Date: 2018
  8. By: David Hulme and Eleni Sifaki
    Abstract: Abstract This paper explores whether UK political parties have moved from an understanding of development cooperation as international development/foreign aid, towards a more ‘global developmental’ approach. Its analytical framework is based on the components of the Commitment to Development Index (CDI), with an additional theme of ‘addressing global inequalities’. The empirical sections examine the election manifestos of the UK’s major political parties since 1997 to see if there is any evidence that they are beginning to recognise that development cooperation is about much more than foreign aid and that it will entail cross-sectoral, ‘joined up’ policy analysis and action. In the conclusion the different speeds at which parties are moving are compared and an initial attempt is made at explaining these differences.tion is that improving access to formal financial services may not, on its own, be sufficient to drive the structural transformation process without the integration of the informal financial sector into the mainstream financial system.
    Date: 2018
  9. By: Flora Myamba (IPC-IG)
    Abstract: "El informe redactado por la Organización de Cooperación y Desarrollo Económicos (OECD, por su acrónimo en inglés) que lleva por título "La protección social en África Oriental: Aprovechando el futuro" (OECD 2017), producido recientemente por el Proyecto sobre Sistemas de Protección Social de la Unión Europea (EU-SPS), señala las bajas tasas de cobertura sobre protección social en el sector informal de África Oriental o del Este, señalándolo como uno de los siete grandes retos que precisan ser solventados antes de los 50 años venideros. Durante años, muchos países en vías de desarrollo de la región de África subsahariana han vivido inmersos en la pobreza y siendo potencialmente vulnerables, contando con índices altos de informalidad en sus mercados laborales: la mayoría de las poblaciones rurales están volcadas a la agricultura, mientras que el sector más pobre de las zonas urbanas trabaja en el sector informal. Así, los mecanismos de protección social del sector público se han mantenido débiles o inexistentes; consecuentemente, la carga de tener que proteger a la población de riesgos y de choques socioeconómicos ha recaído en las familias y las comunidades ? en especial, en las mujeres. Esta ha sido la esencia de la protección social tradicional (e informal) en el área subsahariana, y la percepción que ha sido utilizado para justificar los escasos recursos destinados en este sector provenientes de los programas y políticas gubernamentales". (...)
    Keywords: trabajadores, sector informal, programas, seguridad social, contributiva, caso, Tanzania
    Date: 2017–09
  10. By: Julio E. Romero Prieto (Banco de la República de Colombia)
    Abstract: Usando los registros de la Planilla Integrada de Liquidación de Aportes (PILA), en este documento se investigan las dinámicas de empleo de una población de mujeres jóvenes, que tenían trabajos formales y tomaron licencias de maternidad cuando estas aumentaron de 12 a 14 semanas. Al tratarse de un cambio no anticipado, se argumenta que la Ley 1468 de julio de 2011 dio un tratamiento diferenciado a las mujeres que estaban próximas a recibirla. Para diferentes grupos se compararon las probabilidades de conservar el empleo, iniciar uno nuevo, salir temporalmente de la formalidad o abandonarla permanentemente; en un periodo de 60 meses de observación desde el momento que iniciaron la licencia. Los resultados indican que las licencias protegen el empleo de las madres en el corto plazo y el aumento en la duración no afectó la probabilidad de continuar con el mismo empleo. Sin embargo, a largo plazo sí disminuyó la probabilidad de reengancharse en nuevos trabajos e incrementó la probabilidad de abandonar la formalidad. ******* ABSTRACT: Using the Colombian Integrated Record of Contributions to Social Security, this document investigates the labor dynamics of a population of young women, who had formal jobs and were close to receive a maternity leave when it was increased from 12 to 14 weeks. Being an unanticipated change, it is argued that the Law 1468 of July 2011 gave different treatments to these women. For an observational period of 60 months, intergroup comparisons were made using the probabilities to continue with the same job, to start a new one, to take a temporary leave from the formality, and to drop out of the formal labor market. Results show that the Colombian maternity leave does protect the employment of mothers in the short term; and the increase in duration did not affect the probability to continue with the same job. However, the long-term effects of an extended maternity leave would include lower probabilities to start new jobs and higher probabilities to abandon the formal market. Classification JEL: J10, J13, J21, J83, K36, K38, C41, C90
    Keywords: Fecundidad, dinámicas de empleo y licencia de maternidad
    Date: 2018–05
  11. By: Leonardo Villar; David Forrero
    Abstract: Para estimular el debate de ideas en la contienda presidencial de 2018, Fedesarrollo lideró la elaboración de varios documentos con propuestas de política pública en áreas críticas para el desarrollo económico y social del país. El documento de Villar y Forero presenta una propuesta integral de reforma del sistema de protección económica de la vejez en Colombia, encaminada a corregir sus graves deficiencias y enormes costos fiscales. Los autores proponen un régimen pensional de pilares complementarios. El pilar público administrado por Colpensiones captaría cotizaciones de todos los trabajadores por lo correspondiente a un salario mínimo. Garantizaría además que todos los que cumplan condiciones de pensión obtengan al menos un salario mínimo, lo cual requiere de subsidios estatales, tal como sucede en la actualidad. Para evitar el otorgamiento de subsidios a pensionados de altos ingresos, la propuesta plantea un esquema que reduce gradualmente el subsidio otorgado por Colpensiones a medida que aumenta el ahorro del afiliado en el pilar privado, de capitalización individual. Este segundo pilar recibiría las contribuciones en exceso de un salario mínimo para ahorrarlas en su cuenta individual y complementaría la pensión básica del pilar público con beneficios proporcionales a su ahorro. El diseño propuesto focaliza los subsidios en la población de menores ingresos y reduce los costos fiscales del sistema. En lo que se refiere a las personas que no alcanzan a cumplir las condiciones para obtener una pensión, los autores proponen ajustar el sistema no contributivo de apoyo económico a la vejez, a través de una expansión sustancial del alcance y los beneficios del programa Colombia Mayor. Presentan además propuestas audaces para fortalecer el esquema de beneficios económicos periódicos (BEPS) y potenciarlo como mecanismo integrador del sistema pensional contributivo con los sistemas de apoyo económico para la vejez de los trabajadores informales.
    Keywords: Sistema de Protección Social, Pensiones de Jubilación, Reforma Pensional, Beneficios Económicos Periódicos - BEPS, Subsidios de Vejez, Política Pública, Desarrollo Económico y Social, Vejez, Costos Fiscales, Colombia
    Date: 2018–03–23

This nep-iue issue is ©2018 by Catalina Granda Carvajal. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.