nep-iue New Economics Papers
on Informal and Underground Economics
Issue of 2021‒07‒26
three papers chosen by
Catalina Granda Carvajal
Universidad de Antioquia

  1. A matching model of the market for migrant smuggling services By Naiditch, Claire; Vranceanu, Radu
  2. Import Competition, Formalization, and the Role of Contract Labor By Pavel Chakraborty; Rahul Singh; Vidhya Soundararajan
  3. Digital technology and productivity of informal enterprises: Empirical evidence from Nigeria By Michael Danquah; Solomon Owusu

  1. By: Naiditch, Claire (Université de Lille); Vranceanu, Radu (ESSEC Research Center, ESSEC Business School)
    Abstract: The important flows of irregular migration could not exist without the emergence of a criminal market for smuggling services. A matching model à la Pissarides (2000) provides a well-suited framework to analyze such a flow market with significant trade frictions. Our analysis considers the competitive segment of this underground market in which small-business smugglers can freely enter. The model allows us to determine the equilibrium number of smugglers, the matching probability, the number of successful irregular migrants and, as an original concept, the equilibrium migrant welfare. Changes in parameters can be related to the various policies implemented by destination countries to cut down irregular migration.
    Keywords: Smuggling; Irregular migration; Matching model; Migrant welfare
    JEL: F22 J46 O15
    Date: 2020–01–30
  2. By: Pavel Chakraborty; Rahul Singh; Vidhya Soundararajan
    Abstract: Using the case of the Indian manufacturing sector and exploiting plausibly exogenous variation from Chinese imports, we provide causal evidence that higher import competition increases the share of the formal enterprise employment. We find an increase in the level of formal enterprise employment, driven by the high productivity firms, and in contrast, a fall in the informal enterprise employment. This labor reallocation is enabled by contract workers, who do not carry stringent ring costs. Our estimates imply that Chinese import competition led to an increase in the share of formal sector employment by 4.1 percentage points between 2000 and 2005. We calculate the labor productivity gap between the formal and informal sector, adjusting for differences in prices and worker characteristics and find them to be salient in explaining the observed gap. Our preferred estimate of the productivity gap implies an increase in labor productivity by 3.19% in response to Chinese import competition.
    Keywords: Formal sector employment, Contract workers, Chinese import, Reallocation, Misallocation
    JEL: F14 F16 O17 O47 F66
    Date: 2021
  3. By: Michael Danquah; Solomon Owusu
    Abstract: The lingering policy dilemma facing many governments in sub-Saharan Africa in recent years is what can be done in the short to medium term to boost the output and incomes of individuals and enterprises in the informal sector, given the size and persistence of the sector in the region. In this paper we examine the structural impact of access and usage of digital technology by informal enterprises on labour productivity. Using a sample of non-farm informal enterprises in Nigeria, we employ IV LASSO techniques to carry out our analysis.
    Keywords: Information technology, Informal sector, Productivity, Instrumental variable, Regression analysis, Nigeria
    Date: 2021

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