nep-iue New Economics Papers
on Informal and Underground Economics
Issue of 2018‒12‒10
six papers chosen by
Catalina Granda Carvajal
Universidad de Antioquia

  1. Does the size of the informal economy impede the impact of remittances on economic growth? Evidence from Sub-Saharan African countries By Njangang, Henri
  2. Back to Black? The Impact of Regularizing Migrant Workers By Edoardo Di Porto; Enrica Maria Martino; Paolo Naticchioni
  3. The impact of labor inspections and labor sanctions on registered employment empirical evidence for Argentina using administrative data: executive summary By Ronconi, Lucas.; Ohaco, Moira.
  4. The impact of e-wallet on informal farm entrepreneurship development in rural Nigeria By Joseph I. Uduji; Elda N. Okolo-Obasi; Simplice A. Asongu
  5. Evolutionary tax evasion and optimal regulation By Domenico De Giovanni; Fabio Lamantia; Mario Pezzino
  6. Incidencia de las inspecciones y las sanciones laborales sobre el empleo registrado evidencia empírica para Argentina a partir de los registros administrativos By Ronconi, Lucas.; Ohaco, Moira.

  1. By: Njangang, Henri
    Abstract: The purpose of this paper is to investigate the relationship between remittances and economic growth. Additionally, it examines whether the size of the informal economy alter negatively the effect of remittances on economic growth, which surprisingly has received less attention in the literature. The paper applied the Ordinary Least Squared (OLS) and system Generalized Method of Moment (GMM) by Arellano and Bond (1991) and Arellano and Bover (1995). The sample include 30 Sub-Saharan African (SSA) countries over 1991-2015. The results show that: first, remittances have a positive and significant effect on economic growth. Second, the impact of remittances on economic growth decreases with the size of the informal economy.
    Keywords: Remittances, the informal economy, economic growth, SSA
    JEL: E26 F22 F43 O55
    Date: 2018–11–22
  2. By: Edoardo Di Porto (Università di Napoli Federico II, CSEF and INPS); Enrica Maria Martino (INED and CHILD (Collegio Carlo Alberto)); Paolo Naticchioni (Università di Roma Tre, AIEL, IZA, and INPS)
    Abstract: This paper provides a firm and individual level analysis of the impact on labor market outcomes of regularizing undocumented migrant workers. Using unique administrative data released by the Italian Social Security Institute, we evaluate Italy's largest ever regularization process. We employ an unexpected quasi-random auditing program to deal with firms' self-selection into treatment. Our results show that regularization has only a short-run positive impact on firm employment and no effect on firm-level wages. Nonetheless, 73.5% of regularized migrants remains within the formal Italian labor market, and we find also that legalized migrant coworkers were not affected (negatively) by the reform. Our findings highlight that high mobility of migrants to other firms, provinces and industries is an important driver of our results.
    Keywords: Migration, Legalization, Shadow Economy, Tax Compliance, Policy Evaluation
    JEL: J6 H26 O17
    Date: 2018–12–04
  3. By: Ronconi, Lucas.; Ohaco, Moira.
    Date: 2018
  4. By: Joseph I. Uduji (University of Nigeria, Nsukka, Nigeria); Elda N. Okolo-Obasi (University of Nigeria, Nsukka, Nigeria); Simplice A. Asongu (Yaoundé, Cameroon)
    Abstract: Transforming agriculture from a largely subsistence enterprise to a profitable commercial venture is both a prerequisite and a driving force for accelerated development and sustainable growth in sub-Saharan Africa. The objective of this investigation is to assess the impact of the Federal Government of Nigeria (FGN) e-wallet programme on informal farm entrepreneurship development in rural Nigeria. Informal sector farmers are those that are not legally registered at the national level though could be connected to a registered association. The research is motivated by the absence of literature focusing on the problem statement or objective of study. One thousand, one hundred and fifty-two rural farmers were sampled across the six geo-political zones of Nigeria. Results from the use of a bivariate probit model indicate that the mobile phone-based technology via the e-wallet programme is a critical factor that has enhanced farm entrepreneurship in rural Nigeria. However, results also show that the impact of mobile phones (as a channel to accessing and using modern agricultural inputs) is contingent on how mobile networks are able to link farmers who live in rural areas and work mainly in farming. The results suggest that increasing mobile phone services in rural Nigeria enhances farmers’ knowledge, information and adoption of improved farm inputs and by extension, spurs rural informal sector economic activities in sub-Saharan Africa. Implications for practice, policy and research are discussed.
    Keywords: Informal sector’s adoption, electronic wallet technologies
    JEL: Q10 Q14 L96 O40 O55
    Date: 2018–01
  5. By: Domenico De Giovanni; Fabio Lamantia; Mario Pezzino
    Date: 2018
  6. By: Ronconi, Lucas.; Ohaco, Moira.
    Abstract: La inspección del trabajo y las multas en caso de incumplimiento son dos componentes centrales delos esfuerzos que realiza el Estado para evitar que se viole la normativa laboral. Este documento analiza empíricamente el impacto de dos programas del Ministerio de Trabajo Nacional –el Plan Nacional de Regularización del Trabajo (PNRT) y el Registro Público de Empleadores con Sanciones Laborales (REPSAL) – sobre la registración de trabajadores utilizando una novedosa base de datos que combina información administrativa de diversas fuentes. Los resultados indican que el PNRT y en particular el REPSAL tienen un elevado éxito inmediato. A los 10 días de realizada la inspección, se regulariza 1 decada 2 trabajadores inspeccionados no registrados, o 22 nuevos trabajadores registrados por cada 100 registrados relevados. Las empresas reaccionan rápido, al punto que menos del 15% de las que fueron descubiertas con trabajadores no registrados en el 2015 ingresaron efectivamente al REPSAL. Sin embargo, los resultados sugieren que el efecto no se transmite a los restantes casos de no registración en la firma inspeccionada, y se diluye prácticamente con la misma rapidez. Al año de la inspección, se observan solo 2 nuevos trabajadores registrados por cada 100 registrados, y a los dos y tres años el impacto es estadísticamente indistinguible de cero. Estos resultados son esperables al considerar el proceso de inspecciones y multas. En forma breve, el sistema brinda un “período de gracia” de 10 días en el cual el empleador que incumple con la registración de sus trabajadores – y es descubierto durante la inspección–puede corregir el problema simplemente dando la Clave de Alta Temprana (un trámite sin costo) sin sufrir ninguna multa. Adicionalmente, como no existe el concepto de reincidencia en esta etapa del proceso,el empleador tiene los incentivos económicos para evadir los aportes y las contribuciones a la seguridad social, dado que, si lo vuelven a inspeccionar y encontrar culpable, volverá a tener los 10 días de gracia para solucionar el problema y no enfrentar ninguna multa.
    Abstract: Labor inspection and fines in case of non-compliance are two central components of the State’s efforts to ensure that labor regulations are not violated. This paper empirically analyzes the impact of two programs of the national Ministry of Labor –Plan Nacional de Regularización del Trabajo (PNRT) y Registro Público de Empleadores con Sanciones Laborales (REPSAL) – on the registration of workers using a new database that combines administrative information from various sources. Results indicate that both PNRT, and in particular REPSAL, have high immediate success. Within 10 days of the inspection, 1 out of 2 inspected unregistered workers are regularized, or 22 new registrations workers for every 100 inspected registered workers. Firms react quickly, to the point that less than 15% of those which were discovered with non-registered workers in 2015 actually entered REPSAL. However, the results suggest that the effect is not transmitted to the remaining unregistered workers in the inspected firm, and the effect is quickly diluted there after. One year after the inspection only two new registered workers are observed for every 100 registered workers; and the medium run impact (i.e., two and three years after the inspection) is statistically indistinguishable from zero. These results are not unexpected after considering how the process of inspections and fines actually works. Briefly, the system provides a 10-day “grace period” during which the employer who fails to register workers – and is discovered during the inspection – can correct the problem by simply registering the worker (a process free of charge). No fine applies during this 10-day period. In addition, the system does not penalize recidivism. Therefore, the employer has an economic incentive to evade the payroll tax, since, if she is re-inspected and found guilty, she will have another 10 days to resolve the problem and not face any fines.
    Keywords: $2 ilot
    Date: 2018

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.