nep-iue New Economics Papers
on Informal and Underground Economics
Issue of 2018‒06‒11
nine papers chosen by
Catalina Granda Carvajal
Universidad de Antioquia

  1. Wage inflation and informal work By Bracha, Anat; Burke, Mary A.
  2. Tax Unrest Among Market Traders : The Local Side of ActionAid´s International Tax Justice Campaign in Nigeria By Sempere, Kas
  3. The Effects of Official and Unofficial Information on Tax Compliance By Filomena Garcia; Luca David Opromolla; Andrea Vezzulli; Rafael Marques
  4. The sources of VAT gaps in WAEMU: case studies on Benin and Burkina Faso. By Romain Houssa; Kelbesa Megersa; Roukiatou Nikiema
  5. Labor Market Duality in Korea By Johanna Schauer
  6. Social solidarity for all? Trade union strategies, labour market dualisation and the welfare state in Italy and South Korea By Durazzi, Niccolo; Fleckenstein, Timo; Lee, Soohyun Christine
  7. Les effets de la réforme de la législation applicable aux travailleuses domestiques au Brésil By Joana Simões de Melo Costa; Ana Luiza Neves de Holanda Barbosa; Guilherme Hirata
  8. Les travailleurs du secteur informel et les régimes contributifs d?assurance sociale : le cas de la Tanzanie By Flora Myamba
  9. La maternidad y el empleo formal en Colombia By Julio E. Romero Prieto

  1. By: Bracha, Anat (Federal Reserve Bank of Boston); Burke, Mary A. (Federal Reserve Bank of Boston)
    Abstract: Despite very low unemployment in the United States in recent months, wage inflation has remained modest. This paper investigates the possibility that there is hidden labor market slack in the form of informal or gig economy work, which may help explain this wage growth puzzle. Using unique data from 2015 and 2016 that we collected through the Survey of Informal Work Participation — part of the Federal Reserve Bank of New York’s Survey of Consumer Expectations — we find indirect and direct evidence for this hypothesis. First, we find that a measure of informal labor is negatively associated with wage growth at the census division level, while we observe no significant association between wage growth and the U-3 or U-6 unemployment rate. Second, most informal work participants in our survey report that for some increase in pay, they would drop hours of informal work in exchange for added hours of formal work. Together our results suggest that informal work represents an economically significant amount of potential labor supply to the formal market that may reduce pressure on measured wages. We also discuss other interpretations of our data.
    Keywords: wage inflation; gig economy; labor market slack
    JEL: E24 E26 J21
    Date: 2017–10–01
  2. By: Sempere, Kas
    Abstract: Tax justice has become a popular concept, and a number of international tax justice campaigns have exposed aspects such as the unfairness of tax havens and harmful tax breaks. Yet, the idea of tax justice at the local level is less well-known. The impact of campaigns to end tax havens and harmful tax competition may seem far from the lives and day-to-day tax struggles of many people living in poverty, including market traders in the informal sector. ActionAid, an international non-governmental organisation (NGO), managed, not without challenges, to integrate tax claims of market traders – such as multiple taxation – into its international tax justice campaign in Nigeria. Possibly more could have been done to include additional complaints from traders, such as those facing sudden and steep tax increases and tax harassment, and to support their actions – their visits and letters to the government, in addition to their tax strikes. Overall, however, ActionAid succeeded in linking their campaign at the local, national and international levels, retaining relevance at each of these levels by identifying different targets that could be influenced. ActionAid’s work is a positive example for other tax justice campaigns willing to give a stronger voice to market traders. Borrowing some concepts from social movement theory, this paper narrates the campaign’s journey, with a focus on how the market traders’ own tax challenges were integrated.
    Keywords: Governance,
    Date: 2018
  3. By: Filomena Garcia; Luca David Opromolla; Andrea Vezzulli; Rafael Marques
    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
  4. By: Romain Houssa (CRED, University of Namur); Kelbesa Megersa (CRED, University of Namur); Roukiatou Nikiema (Ouaga II University)
    Abstract: This paper examines the performance of the Value-Added Tax (VAT) in Benin and Burkina Faso since its introduction in the early 1990s. Both countries are witnessing a gradual rise in tax revenue over the study period. The paper also delivers a sectoral breakdown of inefficiencies in VAT-revenue collection in the two countries. We additionally decompose VAT gap in to ‘compliance gap’ and the ‘policy gap’. We find that the sectors responsible for ‘compliance gap’ are largely similar in the two countries. The gaps in VAT collection represent a considerable loss in potential tax revenue. Addressing them will support the ‘Domestic Resource Mobilization’ (DRM) efforts of the two countries.
    Keywords: Value-Added Tax (VAT), Domestic Resources Mobilization (DRM), Tax Reform, Institutional Quality, Economic development
    JEL: H20 H21 H25 H26 O17 O11
    Date: 2017–10
  5. By: Johanna Schauer
    Abstract: Labor market duality is a complex and critical issue for many countries that can lower productivity, contribute to inequality and result in negative externalities. In this paper, I study duality in the Korean labor market and analyze its sources and potential policy options. I find that employment protection legislations and large productivity differentials are the key drivers of Korea’s duality. In addition, applying a general equilibrium search-and-matching model and calibrating it to the Korean economy, I show that well-calibrated flexicurity policies can significantly reduce duality and inequality and raise welfare and productivity. Notably, the introduction of all three pillars—flexiblity, a strong safety net and active labor market policies—is critical for its success. If only one pillar is introduced it can result in negative side-effects and might not reduce duality.
    Date: 2018–06–01
  6. By: Durazzi, Niccolo; Fleckenstein, Timo; Lee, Soohyun Christine
    Abstract: Political-economic analyses of trade unions in post-industrial societies have shifted away from traditional class-analytic approaches to embrace insider/outsider and producer coalition arguments based on the assumption that unions hold on to the defence of their core constituencies in the face of labour market deregulation and dualisation. Challenging this conventional wisdom, we provide an analysis of union strategies in Italy and South Korea, two most-different union movements perceived as unlikely cases for the pursuit of broader social solidarity, and we argue that in both countries unions have successively moved away from insider-focussed strategies. We show a movement towards “solidarity for all” in the industrial relations arena as well as in their social policy preferences. Furthermore, unions also explored new avenues of political agency, often in alliance with civil society organisations. We ascribe this convergent trend towards a social model of unionism to a response of unions to a “double crisis”; that is a socio-economic crisis, which takes the form of a growing periphery of the labour market associated with growing social exclusion, and a socio-political crisis, which takes the form of a increasing marginalisation of the unions from the political process pursued by right- and left-wing parties alike.
    JEL: J50
    Date: 2018–03–26
  7. By: Joana Simões de Melo Costa (IPC-IG); Ana Luiza Neves de Holanda Barbosa (IPC-IG); Guilherme Hirata (IPC-IG)
    Abstract: "Au Brésil, environ 16 pour cent des femmes exerçant une activité professionnelle (soit plus de 6 millions de personnes) occupaient en 2014 un poste de travailleuse domestique, une activité traditionnellement associée à de mauvaises conditions de travail, comme l'informalité, un faible niveau de salaire et un temps de travail hebdomadaire élevé. Il s'agit également d'un emploi unique en son genre, dans la mesure où il relevait jusqu'en 2015 dun autre code du travail que celui s'appliquant aux autres activités privées, soumises pour leur part au Code du travail unifié (Consolidac?a?o das Leis do Trabalho) de 1943. Le travail domestique salarié faisait jusquelà exception, dans la mesure où il était régi par une loi spécifique (Loi n°5 859) de 1972 et par la Constitution fédérale de 1988. La raison de cette différence de traitement réside dans la nature du travail effectué par les travailleurses domestiques, généralement exercé chez l'employeur et à proximité de la famille de celui-ci". (...)
    Keywords: effets, réforme, législation, travailleuses, domestiques, Brésil
    Date: 2017–07
  8. By: Flora Myamba (IPC-IG)
    Abstract: "Récemment produit par le Programme de l'UE sur les Systèmes de Protection Sociale (EU-SPS), le rapport de l'Organisation de coopération et de développement économiques (OCDE) intitulé Social Protection in East Africa : Harnessing the Future (OCDE 2017)1 signale que la faible couverture de la protection sociale dans le secteur informel en Afrique de l'Est constitue l'un des sept grands défis à relever au cours des cinq prochaines décennies. De nombreux pays en développement d'Afrique subsaharienne souffrent depuis des années de la pauvreté et de la vulnérabilité ; leurs marchés du travail enregistrent par ailleurs des taux dinformalité élevés, car le secteur informel y emploie la majorité de la population rurale agricole et de la population urbaine pauvre. Les mécanismes de protection sociale du secteur public y sont par ailleurs restés faibles, voire inexistants, ce qui explique pourquoi la responsabilité de protéger la population des risques et des chocs économiques et sociaux y incombe aux familles et aux communautés elles-mêmes, et plus particulièrement aux femmes. Il s'agit là de lessence de la protection sociale traditionnelle (et informelle) en Afrique subsaharienne, dont la perception a été utilisée pour justifier les faibles ressources allouées à ce secteur dans le cadre de politiques et de programmes gouvernementaux". (...)
    Keywords: travailleurs, secteur informel, régimes, contributifs, assurance sociale, cas, Tanzanie
    Date: 2017–09
  9. By: Julio E. Romero Prieto
    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.
    Keywords: Fecundidad, dinámicas de empleo y licencia de maternidad
    JEL: J10 J13 J21 J83 K36 C41 C90
    Date: 2018–05–18

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