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on Informal and Underground Economics |
| By: | James Alm; James C. Cox; Vjollca Sadiraj |
| Abstract: | Colombian tax reforms have been enacted with no estimates of taxpayer compliance responses to policy innovations. We report the results from the first tax compliance experiment run in Colombia. Our data analysis follows from an original dynamic theoretical model of individual compliance choice that is fully consistent with our experimental design and that should have useful applications to other tax compliance experiments. The model distinguishes between compliance conditional on no previous audits and compliance conditional on previous audits one and two periods earlier, which allows us to discriminate between the implications of naïve and static behavior versus sophisticated and forward-looking behavior in our subsequent empirical analysis. Our estimation results indicate that taxpayer reporting increases with an increase in the audit rate and an increase in the fine rate; we find no significant effects of the tax rate on compliance. We also find that compliance depends upon the use of tax payments; that is, taxpayer reporting is greater when aggregate tax payments are donated to a charity. |
| Keywords: | Tax evasion, experimental economics |
| JEL: | H26 C91 |
| Date: | 2018–10 |
| URL: | http://d.repec.org/n?u=RePEc:exc:wpaper:2018-06&r=iue |
| By: | Pablo Adrian Garlati Bertoldi |
| Abstract: | I characterize informal-formal employment transitions in Paraguay. Results indicate that some factors, such as education and firms size, improve workers' movement between informal and formal employment, and wage gains from moving into formality are modest. Workers who tend to stay indenitely informal are more likely to become unemployed or inactive. Estimates, based on a survival model, indicate that education and firm size highly increase informal-to-formal transitions, especially if workers have stayed informal for a long time. Older women have lower formal-to-informal transitions and, surprisingly, education plays no significant role. Mincer estimates point to high wages for formal workers, compared with informal, but that individual workers' wage gains from moving into formality are small. |
| Keywords: | informality, labor market dynamics, survival analysis, Paraguay |
| JEL: | C41 E26 |
| Date: | 2018–10–09 |
| URL: | http://d.repec.org/n?u=RePEc:col:000416:016837&r=iue |