nep-iue New Economics Papers
on Informal and Underground Economics
Issue of 2019‒11‒18
three papers chosen by
Catalina Granda Carvajal
Universidad de Antioquia

  1. Marginal Cost of Public Funds under the Presence of Informality By Orhan Torul; Ceyhun Elgin; Tugce Turk
  2. Not Just a Work Permit: EU Citizenship and the Consumption Behavior of Documented and Undocumented Immigrants By Adamopoulou, Effrosyni; Kaya, Ezgi

  1. By: Orhan Torul; Ceyhun Elgin; Tugce Turk
    Date: 2018–08
  2. By: Adamopoulou, Effrosyni (University of Mannheim); Kaya, Ezgi (Cardiff Business School)
    Abstract: This paper explores the impact of the 2007 European Union enlargement on the consumption behavior of immigrant households. Using data from a unique Italian survey and a difference-in-differences approach, we find that the enlargement induced a significant consumption increase for the immigrant households from new member states both in the short- and in the medium-run. This enlargement effect cannot be attributed to the mere legalization as it concerns both undocumented and documented immigrants, albeit through different channels. Detailed information on immigrants' legal status (undocumented/documented) and sector of employment (informal/formal) allows us to shed light on the exact mechanisms. Following the enlargement, previously undocumented immigrants experienced an increase in the labor income by moving from the informal towards the formal economy, whereas immigrants who were already working legally in Italy benefitted from the increased probability of getting a permanent contract. Enhanced employment stability in turn reduced the uncertainty about future labor income leading to an increase in documented immigrants' consumption expenditure.
    Keywords: consumption; citizenship; informality; (un)documented immigrants; work permit
    JEL: D12 E21 F22
    Date: 2019–07
  3. By: BOSTAN, Ionel
    Abstract: 21 years ago I published the book Informal Economic Environments, published at the BIT Publishing House (Iasi, RO), which addressed what we considered then to be the underground economy. At that moment it was appreciated that the approach was harsh, given that "recognized personalities in the economic or journalistic field have approached such problems only in a sequential manner" (V. Codreanu, in the Preface). The same precursor notes that "Approaching the mechanisms of the underground economy and understanding their functioning is not intended to ensure its removal (perhaps, at most, its limitation), but will certainly make it easier to obtain more realistic assessments and knowledge of several aspects of it". With the sources of documentation at that time, we dealt with issues such as the identification elements of the informal economy, an overview of it, the measurement issues and the magnitude (in Romania and worldwide). When I approached the Fraud and Tax Evasion, I made a presentation of it, while also presenting the existing motivations and the extent.
    Date: 2018–09–29

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