nep-iue New Economics Papers
on Informal and Underground Economics
Issue of 2023‒03‒27
four papers chosen by
Catalina Granda Carvajal
Universidad de Antioquia

  1. On the relationship between information and individuals’ perception in affecting income tax evasion By Ludovica Spinola
  2. Estimating tax gaps in Zambia: A bottom-up approach based on audit assessments By Kwabena Adu-Ababio; Aliisa Koivisto; Eliya Lungu; Evaristo Mwale; Jonathan Msoni; Kangwa Musole
  3. Informality, Education-Occupation Mismatch, and Wages: Evidence from India By Shweta Bahl; Ajay Sharma
  4. Penalidad a la maternidad: evidencia en el mercado laboral colombiano By Nata Daniela Caro Guevara

  1. By: Ludovica Spinola (Department of Economics, University Of Venice CÃ Foscari)
    Abstract: We experimentally test how information about the number of caught tax evaders, by interacting with individuals’ prior beliefs, affect the decision to underreport taxes. Specifically, our results indicate that when individuals receive the information about the number of people caught evading taxes and perceive this as higher than prior beliefs, they evade less. When, instead, individuals consider the number of caught evaders as low with respect to their beliefs, they evade more. These findings suggest that when subjects are informed on how many people have been found evading taxes they infer the audit probability, rather than the tax evasion rate. Finally, we observe no salience bias effect when considering individuals to whom we highlighted information about others’ norm violation nor when looking at those to whom we emphasised the probability of being audited.
    Keywords: tax evasion, social information, audit probability, salience bias, laboratory experiment
    JEL: D83 D9 H2 H26
    Date: 2023
  2. By: Kwabena Adu-Ababio; Aliisa Koivisto; Eliya Lungu; Evaristo Mwale; Jonathan Msoni; Kangwa Musole
    Abstract: Assessing tax gaps—the difference between the potential and actual taxes raised—plays a vital role in achieving positive domestic revenue objectives through improved and reformed taxation. This is particularly pertinent for growth outcomes in developing countries. This study uses a bottom-up approach based on micro-level audit information to estimate the extent of tax misreporting in Zambia.
    Keywords: Tax gap, Value-added tax, Bottom-up approach, Audits, Tax compliance, Tax administration, Zambia
    Date: 2023
  3. By: Shweta Bahl; Ajay Sharma
    Abstract: This article examines the intertwining relationship between informality and education-occupation mismatch and the consequent impact on wages. In particular, we discuss two issues: first, the relative importance of informality and education-occupation mismatch in determining wages, and second, the relevance of EOM for formal and informal workers. The analysis reveals that although both informality and EOM are significant determinants of wages, the former is more crucial for a developing country like India. Further, we find that EOM is one of the crucial determinants of wages for formal workers, but it is not critical for informal workers. The study highlights the need for considering the bifurcation of formal-informal workers to understand the complete dynamics of EOM, especially for developing countries where informality is predominant.
    Date: 2023–02
  4. By: Nata Daniela Caro Guevara
    Abstract: La persistencia de las desigualdades de género en el mercado laboral es un fenómeno generalizado. Uno de los factores relevantes que explica la persistencia de estas diferencias en el mercado laboral es la maternidad. A partir de una serie de encuestas en hogares, se estima el efecto de la tenencia de hijos/as por primera vez en indicadores de trabajo remunerado y no remunerado, por género. Los resultados muestran que el nacimiento del primer hijo/a reduce la participación y las horas trabajadas a la semana de las madres, aumenta su tasa de informalidad y ocupación por cuenta propia y disminuye su ocupación como asalariada. Los resultados para los padres muestran un aumento en la participación y horas trabajadas. Además, se evidencia un aumento significativo y prolongado en el número de horas que dedican las madres a labores no remuneradas. Estos resultados sugieren que el reparto inequitativo de las cargas asociadas a la crianza de hijos/as lleva a una deserción de las madres en el mercado laboral o, paralelamente, a una transición a ocupaciones informales.
    Keywords: mercado laboral, penalidad a la maternidad, participación laboral, informalidad, América Latina.
    JEL: J13 J16 J46
    Date: 2023–03–03

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