nep-iue New Economics Papers
on Informal and Underground Economics
Issue of 2020‒06‒15
three papers chosen by
Catalina Granda Carvajal
Universidad de Antioquia

  1. Diferencias regionales en el impacto económico del aislamiento preventivo por el COVID-19: estudio de caso para Colombia By Diana Ricciulli-Marín; Jaime Bonet-Morón; Gerson Javier Pérez-Valbuena; Eduardo A. Haddad; Inácio F. Araújo; Fernando S. Perobelli
  2. Impact of COVID-19 on Rural Economy in India By Singh, Bhanu Pratap
  3. The Impact of Country-by-Country Reporting on Corporate Tax Avoidance By Felix Hugger

  1. By: Diana Ricciulli-Marín; Jaime Bonet-Morón; Gerson Javier Pérez-Valbuena; Eduardo A. Haddad; Inácio F. Araújo; Fernando S. Perobelli
    Abstract: Este documento analiza las diferencias regionales en el impacto económico de las medidas de aislamiento ordenadas para evitar la propagación del COVID-19 en Colombia. A través de un modelo insumo-producto, se estiman las pérdidas económicas que resultan de extraer un grupo de empleados formales e informales de los distintos sectores y entidades territoriales del país. Los resultados señalan diferencias regionales en el impacto del confinamiento sobre el mercado laboral, las economías locales y sus sectores productivos. Se encuentra que las regiones periféricas (Amazonía, Caribe, Pacífica y Llanos y Orinoquia) concentran un mayor número de informales en el grupo de ocupados en aislamiento que las regiones centrales (Eje Cafetero y Antioquia, y Central). Por su parte, las pérdidas económicas oscilan desde 5,4% del PIB para la región Amazonía hasta 6,3% en el Eje Cafetero y Antioquia. Además, mientras que el sector servicios concentra las mayores pérdidas en las regiones Eje Cafetero y Antioquia, Central, Caribe, y Pacífica, en la Amazonía y la región Llanos y Orinoquía, las actividades más afectadas pertenecen al sector agropecuario y minero. **** ABTRACT: This paper analyzes the regional economic differences on the impact of lockdown measures ordered by Colombia's national government to prevent the spread of COVID-19. Using an input-output model, we estimate the regional economic losses of extracting a group of formal and informal workers from different sectors of the economy. Results show regional differences in the impact of lockdown on labor markets, local economies, and its productive sectors. We find that peripheral regions (Amazonía, Caribe, Pacífica, and Llanos and Orinoquia) concentrate a higher number of informal workers in the group of employees in lockdown than the central regions (Eje Cafetero and Antioquia, and Central). Regarding economic impact, losses range between 5,4% of GDP for the region Amazonía to 6,3% for Eje Cafetero and Antioquia. Moreover, while the sector of services concentrates the highest losses in the regions Eje Cafetero and Antioquia, Central, Caribe, and Pacífica, in Amazonía, and Llanos and Orinoquia, the economic activities mostly affected belong to mining and agriculture.
    Keywords: COVID-19, matriz insumo-producto interregional, desarrollo regional, COVID-19, inter-regional input-output matrix, regional development
    JEL: R12 R15 R58
    Date: 2020–06–08
  2. By: Singh, Bhanu Pratap
    Abstract: ‘They will go to die there, where there is life ’. COVID-19 lockdown flooded streets with migrant labourers which were marching to their villages to find warmth and empathy. Many reached their homes but several failed and died on streets and railway tracks. The current study offers insights on the plight of migrant labourers and impact of COVID-19 on rural economy in India. The major finding of the study suggests 400 million workers in India in the informal economy are at the risk of falling deeper into poverty during the crisis. The low reporting of COVID-19 cases due to low testing will result in community spread. The reverse migration will create excess pressure on the agriculture and rural economy which will result in a significant number of people to fall into abject poverty. COVID-19 will have both short and long-run effect on the rural economy in India. The government economic package contains majorly long-term measures whereas short-term measures such as cash incentive and wage subsidy should be given to save migrant labourer and marginal farmers. Above all, mass corruption in the system is the biggest challenge in the effective implementation of plans.
    Keywords: COVID-19, Migrant Labourers, Agriculture, Rural Economy
    JEL: J61 J78 O15 O53 P25 P46 R23
    Date: 2020–05–20
  3. By: Felix Hugger
    Abstract: Within the framework of the OECD BEPS initiative many countries introduced nonpublic country-by-country reporting for MNEs above a revenue threshold. The reports provide tax authorities with information on the global activities of multinationals at a country level. This paper investigates the responses of companies to country-bycountry reporting and tests whether the goal of a reduction in tax avoidance is achieved. Difference-in-difference estimations show an increase in consolidated effective tax rates of about one percentage point in the treatment group and provide evidence for a reduction in profit shifting at the subsidiary level. Responses are more pronounced for companies experiencing a stronger increase in detection probability. At the same time, total tax payments do not rise, which may be explained by a decrease in economic activity of companies in scope. The second part of the paper investigates avoidance of the disclosure obligation and documents substantial excess mass just below the revenue threshold in the post-reform years. This effect is stronger for company types with higher costs of CbCR and lower costs of adjusting revenues.
    Keywords: Corporate tax avoidance, multinational firms, country-by-country reporting, disclosure regulation
    JEL: F23 H26 K34 M48
    Date: 2019

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