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on Informal and Underground Economics |
| By: | Era Dabla-Norris; Mark Gradstein; Fedor Miryugin; Florian Misch |
| Abstract: | The extent of tax compliance has important implications for revenue yield, efficiency and the fairness of any tax system. Tax evasion undermines revenue collection, distorts competition, and undermines a country’s development prospects. In this paper, we investigate whether higher productivity causally leads to lower tax evasion. We first present stylized facts consistent with this view and develop a model that illustrates one potential transmission channel. Second, we test the model predictions at the firm level using the self-reported share of declared income as proxy for tax evasion for a large sample of emerging and developing economies. Our results suggests that productivity improvements by firms can lead to lower tax evasion. |
| Keywords: | economic development, firm productivity, tax evasion |
| JEL: | D20 H26 O47 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8002&r=all |
| By: | Dimitrios Psychoyios (University of Piraeus); Olympia Missiou (International Hellenic University); Theologos Dergiades (Department of International & European Studies, University of Macedonia) |
| Abstract: | The shadow economy (SE) is a pathological normalcy, not only in developing countries but also in developed ones, causing disagreeable distortions in the real economy. In this paper, we estimate the size of the informal sector in nineteen countries of the European Union (EU) by implementing three variations of the physical input approach (we use electricity consumption as input). All estimates show that EU countries experience high shadow economy levels with a decreasing trend. Moreover, we assess the explanatory power of three governance quality indicators of the informal sector using a set of panel regression specifications as well as a set of quantile regression specifications. Both approaches show that overall governance quality is the most prominent factor in determining the SE levels. Given the inherent advantage of quantile regression to identify impact differentiations across the conditional distribution of the dependent variable a significant policy action is revealed. In particular, countries with high shadow economy levels can reduce their informal sector, at an increasing rate, by improving governance quality. |
| Keywords: | Shadow economy; Energy; Panel and Quantile regression; Governance quality. |
| JEL: | E26 G15 Q43 O17 O52 |
| Date: | 2019–11 |
| URL: | http://d.repec.org/n?u=RePEc:mcd:mcddps:2019_07&r=all |
| By: | Blaufus, Kay; Schöndube, Jens Robert; Wielenberg, Stefan |
| Abstract: | We examine whether tax audit regimes become more efficient if (i) there are audited financial statements and (ii) tax auditors have access to the internal statutory audit report revealing information about statutory audit adjustments. Our analysis is based on a standard tax compliance game that we extend to model the strategic interaction among a firm issuing financial and tax reports, a statutory auditor, and a tax auditor. We find that the efficiency effects of additional information depend on the strength of tax auditor incentives and the weight that firms place on book income. For high-powered tax auditor incentives, we obtain no information effect on our efficiency measures. For low-powered tax auditor incentives, we find an ambiguous effect, and for mediumpowered tax auditor incentives and firms that place a high weight on book income, tax audit efficiency increases if the tax auditor has access to additional information. In the latter case, we find that granting the tax auditor access to the internal statutory audit report increases firms' tax compliance, raises tax revenues, and decreases tax audit frequency. |
| Keywords: | Tax compliance game,Tax audit,Statutory audit,Tax audit efficiency,Strategic auditing |
| JEL: | H26 M41 M42 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:arqudp:249&r=all |
| By: | Blake, Michael; Kriticos, Sebastian |
| Abstract: | This brief discusses several policy options that could improve tax compliance and tax administration in Mandalay – helping the city to escape its low-tax and underfunded services trap. Increasing the perceived benefits of paying tax – by communicating the link between tax and infrastructure – would likely encourage compliance, so long as the government can facilitate ease of payment through effective approaches to tax collection. To be effective at using such policies, cities first need strong foundations for tax administration. In particular, Mandalay could look to update its systems for property identification and assessment. The brief suggests several different approaches to do this and their associated trade-offs. |
| JEL: | E6 |
| Date: | 2019–03–29 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:103070&r=all |
| By: | Braml, Martin; Felbermayr, Gabriel |
| Abstract: | The world runs a trade surplus with itself: Exporters report larger values of exports than what importers report as imports. This is a logically impossible but well known empirical fact. Less well known, in recent years, more than 80 percent of the global surplus is a trade surplus that the EU has with itself. In this paper, we show that this self-surplus of the EU amounts to a striking 307 billion Euro in 2018. It persists in goods, services, and secondary income accounts. It also exists within the Euro Area, and is strongest between neighboring countries. Around the 2004 Eastern Enlargement the EU's self-surplus quadrupled. Balance of payments data from the United Kingdom appear highly distorted. We argue that the phenomenon is not only due to measurement error. Rather, a large fraction of the EU's self-surplus puzzle seems related to fraud in value added tax. The loss in tax income could amount to as much as 64 billion Euro per year. |
| Keywords: | Trade,VAT Fraud,Statistical Discrepancies,Current Accounts |
| JEL: | F36 F32 F24 H26 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwkwp:2146&r=all |
| By: | Conti, Gabriella; Ginja, Rita; Narita, Renata |
| Abstract: | Brazil began the implementation of SUS (Universal Health Insurance) in 1988. To the extent that SUS broke the link between employment contract and health insurance, it may have changed the incentives for individuals to participate in the labor market and in which sector to work (formal or informal). Our goal is to study the labor market impacts of SUS. We do so by structurally estimating a labor market model that allows us to address three main questions (i) How much of the increase in informality in Brazil is due to the introduction of non-contributory health insurance? (ii) How much do individuals value health insurance? And (iii) What are the welfare impacts of increases in the value of non-contributory health insurance? The model is fitted to Brazilian employment data and used to simulate changes in welfare, employment, informality and wages of different noncontributory health insurance policies. |
| Keywords: | Innovación social, Políticas públicas, Salud, |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:dbl:dblwop:1519&r=all |
| By: | Maye Ehab (University of Bamberg) |
| Abstract: | Youth in Egypt suffer from high rates of unemployment and inactivity. They are also heavily affected by the widespread use of informal employment. This paper addresses the effects of employment transitions on the health of youth in Egypt. It specifically focuses on the effect of temporary and informal employment compared to non-employment on the psychological health of youth. Using data from the Survey of Young People in Egypt for the years 2009 and 2014, I identify the causal effects of various employment transitions on mental health outcomes by estimating a matched difference-in-differences. Results show that the transition from nonemployment to employment improves the individual’s mental health in general. There are differences in the magnitude of the effect according to gender and the type of employment where those in informal and temporary employment have lower improvements compared to formal and permanent employment. |
| Date: | 2019–10–20 |
| URL: | http://d.repec.org/n?u=RePEc:erg:wpaper:1355&r=all |
| By: | Mona Amer (Cairo University); Marian AtallahAuthor-Name-First: Marian Author-Name-Last: AtallahAuthor-Email: |
| Abstract: | This paper explores the school-to-work transition patterns of young people in Egypt over the past two decades (1998-2018). In particular, it seeks to update the findings on labor market insertion trajectories using data from the most recent Egypt Labor Market Panel Survey (ELMPS) fielded in 2018 along with its predecessor surveys in 1998, 2006 and 2012. The analysis makes use of the 2018 labor market history module to elicit information on early labor market outcomes such as the time taken to find the first job and the type of job found after completing education. We also define youth economic vulnerability in the work setting and investigate its symptoms in the Egyptian labor market including forms of precarious employment (such as informality and irregular work). Finally, we shed light on socioeconomic status as one of the potential channels behind this vulnerability. Results reveal a rise in informal employment among youth in recent years and suggest that belonging to a lower socioeconomic bracket (as proxied by mother’s education and father’s occupation) increases exposure to informality. |
| Date: | 2019–10–20 |
| URL: | http://d.repec.org/n?u=RePEc:erg:wpaper:1353&r=all |
| By: | Selwaness, Irene |
| Abstract: | This paper aims to study the evolution in the age composition of males' employment in the aftermath of the public sector downsizing in the 1990s -during the Economic Reform and Structural Adjustment Policies - and the new labor law in 2003. This answers the question of whether young (15-29) and older (50-59) male workers were the most likely to bear the brunt of the 1990s reforms and the new labor law in 2003. Employment, formality and hours-of-work are simultaneously estimated by maximum likelihood to control for the self-selection, using three repeated cross sectional samples from Egyptian Datasets conducted in 1988, 1998 and 2006. Results show that men aged (15-29) and those aged (50-59) were less likely, as compared to their peers in middle age (30-49), to be employed in 1998 than in 1988 (before the first reform). While informality has affected all age groups, the 30 to 49 years old were the category that experienced the most rapid increase in informality as compared to the other two age groups. Findings also show evidence of negative correlation between the probability of employment and the probability of having a formal job, indicating that those who have more incidence to work in formal jobs are more likely to remain unemployed or inactive. |
| Keywords: | Structural Adjustment Programs,Labor Supply,Informality,Simultaneous Equations,Middle-East,Egypt |
| JEL: | J08 J21 N35 C3 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:455&r=all |
| By: | Anne Briand (LASTA - Laboratoire d'Analyse des Sociétés, Transformations et Adaptations - UNIROUEN - Université de Rouen Normandie - NU - Normandie Université); Noukignon Kone (LASTA - Laboratoire d'Analyse des Sociétés, Transformations et Adaptations - UNIROUEN - Université de Rouen Normandie - NU - Normandie Université) |
| Abstract: | The article analyzes data from a Contingent Valuation survey that we conduced in 2014 among 402 households in low-income settlements of Abidjan in order firstly, to identify the determinants of stated demand for an informal waste collection service and secondly, to evaluate the benefits of using this service on different impact variables linked to human development. Indeed, households are exposed to negative externalities (odours, insects, health risks, loss of quality of life) that could lead them wish to offset the loss of utility with an individual investment in the informal service. The article contributes to the academic literature and gives recommendations in terms of economic policy applied to the waste sector in Africa. Firstly, our study identifies the determinants of stated demand for the informal service and the ability of households to finance an improved service. Secondly, the article evaluates the beneficial effects of using the informal service by the propensy score method. We evaluate the impact of the use of the informal service on the monthly amount that households are willing to pay for the improved service. We quantify the benefits in terms of socioeconomic and human development. |
| Date: | 2020–01–10 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-02430455&r=all |
| By: | Huang, Donna; Parkinson, Sharon; James, Amity; Liu, Edgar |
| Abstract: | This study investigated how low-income renters navigate the private rental sector (PRS) via three core pathways: the formal (via traditional or mainstream real estate agent intermediaries), informal (direct to rooms and dwellings privately managed by landlords and sub-landlords) and supported pathways (via community housing agencies). It provides practitioners and policy makers with an evidence base on changing practices and ways forward in shaping equitable PRS institutions. |
| Date: | 2018–07–18 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:4yjsw&r=all |