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on Informal and Underground Economics |
| By: | James Alm (Tulane Economics); Joyce Beebe (Rice University); Michael S. Kirsch (Notre Dame Law School); Omri Marian (University of California, Irvine); Jay A. Soled (Rutgers University) |
| Abstract: | Improving tax compliance is a common goal of governments worldwide. The United States is no exception. The size of the nation’s “tax gap” — or the difference between what taxpayers pay in taxes in a timely manner and what they should pay if they fully complied with the tax laws — is hundreds of billions of dollars annually, significantly depriving the nation of much-needed revenue. This paper explores the mixed effects of technological advancements on tax compliance — and, thus, its counterpart, tax noncompliance. On the one hand, technological advances have largely eradicated many of the commonplace tax-noncompliance techniques that once reigned during the twentieth century. On the other hand, many of these very same technological advances threaten to usher in new modes of tax evasion. Which of these emergent trends will dominate is unclear. The outcome will largely depend upon whether Congress updates the tax laws to address technological advances and grants sufficient funding to the Internal Revenue Service to maintain robust enforcement efforts in an ever-changing technological landscape. Failure to take these steps will destine the size of the tax gap to expand. Many prior studies have addressed discreet effects of specific technologies on tax compliance. This paper contributes to this developing literature by offering a cohesive framework to address technological advancement and tax compliance. |
| Keywords: | Technology, Tax compliance, Tax gap. |
| JEL: | H24 H26 |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:tul:wpaper:2009&r=all |
| By: | James Alm (Tulane Economics); Antoine Malézieux (Burgundy School of Business) |
| Abstract: | We collect individual participant data from 70 papers that use laboratory experiments to examine individual tax evasion behavior (or "Tax Evasion Games"), in order to use meta-analysis to estimate the impacts of different public policy, experimental design and individual level variables on tax evasion choices. Our results show that standard enforcement variables like audits (including audit rules) and fines perform differently on the extensive and intensive margins. We find that other fiscal variables like a flat tax system, tax rates, and tax amnesties have unambiguous negative impacts on tax compliance, and that specific features of the experimental setting, such as how subjects are directed to report income, or whether taxes are redistributed to the participants or to a real life public good, have significant impacts on tax compliance. Our results also indicate that the demographic characteristics of the subjects (e.g., gender, experimental income, occupation, risk attitude) affect compliance. |
| Keywords: | Tax evasion, Tax compliance, Meta-Analysis. |
| JEL: | C9 H0 H3 |
| Date: | 2020–08 |
| URL: | http://d.repec.org/n?u=RePEc:tul:wpaper:2004&r=all |
| By: | Matthias Kasper (Tulane Economics and University of Vienna); James Alm (Tulane Economics) |
| Abstract: | This study uses a laboratory experiment to investigate the effect of tax audits on post-audit tax compliance. An important feature of our experimental design is the addition of audit ”effectiveness” to our audit mechanism, where effectiveness is defined as the share of undeclared income that the tax agency detects in an audit. This addition allows us to examine the effects of audit effectiveness on post-audit compliance. We also study whether tax audits have differential effects on different types of taxpayers, as distinguished by their prior reporting behavior. Contrary to theoretical predictions, we find that tax audits have differential effects on post-audit compliance and that the effectiveness of audits determines these responses; that is, while effective audits increase post-audit tax compliance, ineffective audits have the opposite effect. We also find that tax audits (whether effective or not) increase subsequent compliance of noncompliant taxpayers while they reduce compliance among individuals who have been found to report their income correctly. Finally, we find no evidence that tax audits crowd out the intrinsic motivation to comply of honest individuals. Our findings suggest that the specific deterrent effect of tax audits is more ambiguous than much previous analysis suggests, with these effects dependent on the effectiveness of the audit process and on the taxpayer’s prior reporting behavior. |
| Keywords: | Tax compliance; Audit effectiveness; Specific deterrence; General deterrence; Laboratory experiments. |
| JEL: | C9 H26 H83 |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:tul:wpaper:2010&r=all |
| By: | James Alm (Tulane Economics); Ali Enami (The University of Akron); Michael McKee (Appalachian State University) |
| Abstract: | How does individual tax compliance respond to a change in the audit rate? Most all empirical evidence suggests that an increase in the audit rate increases the compliance rate, a result that is also consistent with standard theoretical analysis of the individual compliance decision. However, this empirical evidence is typically based on estimating an average response across all taxpayers, and an average response may conceal much heterogeneity in individual responses. This paper collects individual- level data from identical laboratory experiments across five separate studies with a total of 278 student subjects that generated 8340 individual observations, in which only audit rates are varied, in order to disentangle individual responses to audit rate changes. As with most previous empirical work, our results indicate that the average response across all taxpayers is to increase (decrease) compliance when audit rates increase (decrease). However, this average response conceals enormous heterogeneity in individual responses. When the individual responses are examined in more detail, our data show that many individuals do in fact respond to higher (lower) audit rates by increasing (decreasing) their compliance. However, these individuals represent only about 2/3 of all subjects. In fact, our data also show that many individuals do not respond at all to audit rate changes. Surprisingly, our data further show that some individuals actually decrease their compliance when audit rates increase, and vice versa. All of these different individual responses indicate that government policy interventions must consider the “full house” of individual behaviors when devising appropriate policies. |
| Keywords: | Tax evasion, Tax compliance, Behavioral economics, Experimental economics. |
| JEL: | H26 C91 |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:tul:wpaper:2007&r=all |
| By: | James Alm (Tulane Economics); Matthias Kasper (Tulane University and University of Vienna) |
| Abstract: | Market adjustments to tax evasion alter factor and product prices, which determine the true impacts and beneficiaries of tax evasion. |
| Keywords: | Tax evasion, Tax incidence, General equilibrium. |
| JEL: | H26 H30 |
| Date: | 2020–08 |
| URL: | http://d.repec.org/n?u=RePEc:tul:wpaper:2005&r=all |
| By: | James Alm (Tulane Economics); Matthias Kasper (Tulane University and University of Vienna) |
| Abstract: | In this chapter we assess the use of laboratory experiments in tax compliance research. We first discuss the reasons for using laboratory experiments, and we then describe the basic design of most experiments, including their main limitations. We also summarize some of the main results of these studies, and we discuss how the insights obtained from experimental research can help shape better tax policies. We conclude with some suggestions on new areas of research on tax compliance in which laboratory experiments may be usefully applied in the future. |
| Keywords: | Tax evasion; Behavioral economics; Laboratory experiments. |
| JEL: | H2 H26 D03 C9 |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:tul:wpaper:2008&r=all |
| By: | Jain, Varinder |
| Abstract: | Informal sector employment suffers from not only inadequate and irregular earnings but they also remain exposed to a variety of vulnerabilities. Available research has been general in nature as most of the time, the analysis has remained narrative and there has been no systematic attempt to arrive at a framework to conceptualise and quantify the incidence of vulnerability in informal manufacturing sector so as to examine its correlates and the related characteristics that influence the exposure to vulnerability. Such lacunae in research provide us an opportunity to arrive at a holistic framework for the quantification of vulnerability in informal manufacturing sector. This paper discussing various conceptual and analytical issues implicit in the quantification of vulnerability exposure in informal manufacturing sector serves as a first step towards that direction. |
| Keywords: | Informal Sector, Informal Manufacturing, Vulnerability, Livelihood Insecurity, Working Poor |
| JEL: | A1 J01 J46 J62 J71 J81 |
| Date: | 2020–05–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:103158&r=all |
| By: | Ignacio P. Campomanes |
| Abstract: | How does the interaction between inequality and social mobility affect the choice of fiscal policy? I analyze this question in a model of democratic politics with imperfect tax enforcement, where the ability of individuals to evade taxes limits the amount of redistribution in the economy. Social mobility creates an insurance motive that increases voluntary compliance, favoring the tax enforcement process. In such an environment, redistributive pressures brought about by an increase in inequality are only implementable in highly mobile societies. On the contrary, when mobility is low, higher inequality reduces tax rates and does not translate into higher redistribution. I empirically analyze the predictions of the model for a sample of 72 countries during the period 1960-2015. Using cross-sectional as well as panel estimation techniques, the results point to a positive relation between market inequality and the level of redistribution only when social mobility is relatively high. |
| Keywords: | Inequality, Social Mobility, Fiscal Policy, Tax Evasion. |
| JEL: | E62 D31 J62 H26 P16 |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:nva:unnvaa:wp05-2020&r=all |
| By: | Filipe Correia; António Martins |
| Abstract: | Credit markets are at the core of any economic crisis, and informal loans are largely under studied. We collect a dataset on an online informal lending community to study the impact that the 2020 pandemic crisis had on informal credit markets. We find that these informal loans are short duration, expensive and that borrowers and lenders exhibit some sense of community. Our results suggest that the financial hardship imposed by stay athome orders is perceived as persistent, and borrowers expect lower future income, hencereducing loan demand. Moreover, loans directly associated with the pandemic are more likely to be transacted by newcomers to this market, and mentioning the pandemic in a loan request lowers the chance that it originates a loan. The absence of an increase of violations ofcommunity rules and the reduction in promised repayment time highlights the importance of informal credit communities in hard times. |
| Keywords: | informal credit, online lending, pandemic, non-pharmaceutical interventions |
| JEL: | G21 |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:ise:remwps:wp01452020&r=all |
| By: | Fabianna Bacil (IPC-IG); Gabriel Soyer (IPC-IG) |
| Abstract: | COVID-19 is posing an unprecedented challenge to countries' social protection systems. Informal workers are particularly at risk, as they often represent the 'missing middle', covered by neither social assistance nor social insurance. In a recent policy brief, the IPC-IG and UNICEF ROSA analyse the economic fallout from the crisis and the policy measures taken in eight South Asian countries, and advocate for the inclusion of the missing middle in mainstream social protection. This One Pager summarises the study's findings for India. |
| Keywords: | social protection; COVID-19; emergency response; informal workers; India |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:ipc:opager:450&r=all |
| By: | Fabianna Bacil (IPC-IG); Gabriel Soyer (IPC-IG) |
| Abstract: | COVID-19 is posing an unprecedented challenge to countries' social protection systems. Informal workers are particularly at risk, as they often represent the 'missing middle', covered by neither social assistance nor social insurance. In a recent policy brief, the IPC-IG and UNICEF ROSA analyse the economic fallout from the crisis and the policy measures taken in eight South Asian countries, and advocate for the inclusion of the missing middle in mainstream social protection. This One Pager summarises the study's findings for Bangladesh. |
| Keywords: | social protection; COVID-19; emergency response; informal workers; Bangladesh |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:ipc:opager:448&r=all |
| By: | Beatriz Burattini (IPC-IG) |
| Abstract: | COVID-19 is posing an unprecedented challenge to countries' social protection systems. Informal workers are particularly at risk, as they often represent the 'missing middle', covered by neither social assistance nor social insurance. In a recent policy brief, the IPC-IG and UNICEF ROSA analyse the economic fallout from the crisis and the policy measures taken in eight South Asian countries, and advocate for the inclusion of the missing middle in mainstream social protection. This One Pager summarises the study's findings for Afghanistan. |
| Keywords: | social protection; COVID-19; emergency response; informal workers; Afghanistan |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:ipc:opager:447&r=all |
| By: | Krista Joosep Alvarenga (IPC-IG); Fábio Veras Soares (IPC-IG) |
| Abstract: | COVID-19 is posing an unprecedented challenge to countries' social protection systems. Informal workers are particularly at risk, as they often represent the 'missing middle', covered by neither social assistance nor social insurance. In a recent policy brief, the IPC-IG and UNICEF ROSA analyse the economic fallout from the crisis and the policy measures taken in eight South Asian countries, and advocate for the inclusion of the missing middle in mainstream social protection. This One Pager summarises the study's findings for Bhutan. |
| Keywords: | social protection; COVID-19; emergency response; informal workers; Bhutan |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:ipc:opager:449&r=all |
| By: | Yannick Markhof (IPC-IG); Khurram Arif (IPC-IG) |
| Abstract: | COVID-19 is posing an unprecedented challenge to countries' social protection systems. Informal workers are particularly at risk, as they often represent the 'missing middle', covered by neither social assistance nor social insurance. In a recent policy brief, the IPC-IG and UNICEF ROSA analyse the economic fallout from the crisis and the policy measures taken in eight South Asian countries, and advocate for the inclusion of the missing middle in mainstream social protection. This One Pager summarises the study's findings for Pakistan. |
| Keywords: | protection; COVID-19; emergency response; informal workers; Pakistan |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:ipc:opager:453&r=all |
| By: | Isabela Franciscon (IPC-IG); Pedro Arruda (IPC-IG) |
| Abstract: | COVID-19 is posing an unprecedented challenge to countries' social protection systems. Informal workers are particularly at risk, as they often represent the 'missing middle', covered by neither social assistance nor social insurance. In a recent policy brief, the IPC-IG and UNICEF ROSA analyse the economic fallout from the crisis and the policy measures taken in eight South Asian countries, and advocate for the inclusion of the missing middle in mainstream social protection. This One Pager summarises the study's findings for Nepal. |
| Keywords: | social protection; COVID-19; emergency response; informal workers; Nepal |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:ipc:opager:452&r=all |
| By: | Krista Joosep Alvarenga (IPC-IG) |
| Abstract: | COVID-19 is posing an unprecedented challenge to countries' social protection systems. Informal workers are particularly at risk, as they often represent the 'missing middle', covered by neither social assistance nor social insurance. In a recent policy brief, the IPC-IG and UNICEF ROSA analyse the economic fallout from the crisis and the policy measures taken in eight South Asian countries, and advocate for the inclusion of the missing middle in mainstream social protection. This One Pager summarises the studys findings for Maldives. |
| Keywords: | social protection; COVID-19; emergency response; informal workers; Maldives |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:ipc:opager:451&r=all |
| By: | Isabela Franciscon (IPC-IG); Pedro Arruda (IPC-IG) |
| Abstract: | COVID-19 is posing an unprecedented challenge to countries' social protection systems. Informal workers are particularly at risk, as they often represent the 'missing middle', covered by neither social assistance nor social insurance. In a recent policy brief, the IPC-IG and UNICEF ROSA analyse the economic fallout from the crisis and the policy measures taken in eight South Asian countries, and advocate for the inclusion of the missing middle in mainstream social protection. This One Pager summarises the study's findings for Sri Lanka. |
| Keywords: | social protection; COVID-19; emergency response; informal workers; Sri Lanka |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:ipc:opager:454&r=all |
| By: | Hadrien Saiag (IIAC - Institut interdisciplinaire d'anthropologie du contemporain - CNRS - Centre National de la Recherche Scientifique - EHESS - École des hautes études en sciences sociales) |
| Abstract: | This paper considers the way in which the financial practices of informal workers changed during the Kirchner governments (2003-2015). In this period, popular economy workers massively accessed to consumer credit, as a consequence of their incorporation into the social protection system and the partial formalisation of precarious jobs. Workers experienced this change in an ambivalent way: while accessing to consumer credit is considered an element of social inclusion, it also exposes workers to a new form of exploitation, based on the discrepancy between the (monthly based) time of finance and the (erratic) time of work, that tend to exacerbate inequalities. In order to include without exploiting, it is thus necessary to connect finance with social rights. |
| Abstract: | El crédito al consumo en los sectores populares argentinos Entre inclusión y explotación (Rosario Resumen Este artículo analiza las transformaciones de las prácticas financieras de los sectores populares del cordón industrial rosarino durante los gobiernos kirchneristas. En este periodo, los trabajadores de la economía popular accedieron por primera vez al crédito al consumo de forma masiva, como consecuencia de su incorporación al sistema de protección social y de la formalización parcial de trabajos precarios. Los trabajadores percibieron esta transformación de forma ambivalente: por un lado, el acceso a dicho crédito significó una forma de inclusión para quienes no habían tenido acceso a este por falta de ingresos estables; por otro lado, expuso a los trabajadores de la economía popular a una nueva forma de explotación basada en el desfasaje temporal entre las finanzas y el trabajo precario, que agudizó las estratificaciones vigentes dentro de los sectores populares. Para incluir sin explotar, resulta imprescindible vincular finanzas y derechos. Abstract This paper considers the way in which the financial practices of informal workers changed during the Kirchner governments (2003-2015). In this period, popular economy workers massively accessed to consumer credit, as a consequence of their incorporation into the social protection system and the partial formalisation of precarious jobs. Workers experienced this change in an ambivalent way: while accessing to consumer Palabras clave |
| Keywords: | Debt,Financial exploitation,Popular economy,Temporalities,Consumo,Deuda,Explotación financiera,Economía popular,Temporalidades |
| Date: | 2020–07–17 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-02934836&r=all |
| By: | Zapana Mestas, Luis Pedro; Ríos Pita Diez, José Antonio; Canales Quispe, Juan Javier |
| Abstract: | En 2002 el Estado peruano promulgó la Ley N° 27651 “Ley de Formalización y Promoción de la Pequeña Minería y la Minería Artesanal” y su reglamento D.S. N° 013-2002-EM, que incorporó la categoría de la pequeña minería y minería artesanal a la estructura de la minería peruana y en la Ley General de Minería, con el objetivo de formalizar esta actividad. En el año 2011, el Decreto Legislativo N° 1105 estableció 6 pasos para que un minero informal alcance la formalidad, partiendo de la presentación de una declaración de compromiso. El Ministerio del Ambiente del Perú (Minam, 2016, pp. 237), señala que 77,723 mineros informales habían declarado su intención de formalizarse hasta enero 2013, de los cuales 40,648 mineros informales estaban vigentes en el registro de saneamiento creado en abril del 2014 por el DS. 029-2014-PCM. Hasta diciembre 2016 lograron formalizarse 102 mineros informales en todo el Perú, entre empresas, cooperativas o personas naturales; lo cual solo representa el 0.25% del total del registro de saneamiento a nivel nacional, mientras que en Puno solo 11 mineros informales lograron alcanzar la formalidad, lo cual representa el 0.29% del total de 3,771 mineros informales vigentes en la Región de Puno. El estudio se realizó con la finalidad de identificar los factores que afectaron este proceso de formalización de la pequeña minería y minería artesanal en la región de Puno y con el propósito también de conocer por qué no se alcanzó el objetivo de formalizar a todos o a la mayoría de los 6,983 mineros informales, que declararon su voluntad de formalizarse hasta enero del año 2013. Es importante resaltar que la actividad minera, especialmente la del oro, representa el 97% de las exportaciones de la región de Puno, con valores promedio en los últimos cinco años de 1,200 millones de dólares anuales (Perú. Ministerio de Comercio Exterior y Turismo [Mincetur], 2018). Los factores identificados y que afectaron al proceso de formalización, se clasificaron como factores internos y externos; como factores internos se identificó factores estratégicos, organizacionales, legales, burocráticos, económicos, asistencia técnica y tecnológica, de control y fiscalización y de la voluntad de formalizarse; como factores externos se identificó el precio del oro, la corrupción y el factor relacionado a los recursos geológicos, los cuales han tenido un impacto directo en los resultados obtenidos por el Estado durante el proceso de formalización de la pequeña Minería y Minería Artesanal entre los años 2012 al 2016. |
| Keywords: | Mining, Extraction, and Refining; Other Nonrenewable Resources; Formal and Informal Sectors; Minería ilegal; Minería informal; Formalización minera |
| JEL: | L72 O17 |
| Date: | 2020–08 |
| URL: | http://d.repec.org/n?u=RePEc:ger:tesmgm:0008&r=all |