nep-iue New Economics Papers
on Informal and Underground Economics
Issue of 2023‒05‒01
five papers chosen by
Catalina Granda Carvajal
Universidad de Antioquia

  1. Input-Trade Liberalization and Formal Employment: Evidence from Mexico By Pamela Bombarda; Maria Bas
  2. Measuring Stimulus Effects Around Stock Road in Philippi in the Western Cape By Shamima VAWDA; Mélani PRINSLOO; Martin PRINSLOO; Rawane YASSER
  3. Microcredit as A Strategy for Employment Creation: A Systematic Review of the Literature By Djihad, Tria; Harun, Mukaramah; Alam, Md. Mahmudul
  4. Optimal income taxation with tax avoidance and endogenous labor supply By Georges Casamatta
  5. Reforma pensional e informalidad laboral en Colombia By Sergio Clavijo

  1. By: Pamela Bombarda; Maria Bas (Université de Cergy-Pontoise, THEMA)
    Abstract: This work investigates the role of input-trade liberalization on labor allocation between informal and formal employment in Mexico. Using individual household data for Mexico (1993-2001), we exploit exogenous input tariff changes applied to United States (U.S.) products when Mexico enters the North American Free Trade Agreement (NAFTA) in 1994. The theoretical mechanisms considered are the foreign input cost reduction that increases revenues in the formal sector and the foreign input-skilled biased channel, such that input-trade liberalization induces the reallocation of workers from informal to formal firms. Our findings confirm these mechanisms: individuals working in manufacturing industries experiencing the average reduction in input tariffs (12 percentage points) are almost 4 percent more likely to work in formal rather than informal occupations. This effect is concentrated on high-skilled workers which reinforces the input-skilled biased complementarity channel.
    Keywords: informal and formal employment, trade liberalization, household data
    JEL: F12 F16 O14 J16 O17
    Date: 2023
  2. By: Shamima VAWDA; Mélani PRINSLOO; Martin PRINSLOO; Rawane YASSER
    Abstract: The study aims to contribute to the body of knowledge on the impact of social protection and employment stimulus measures on the formal and informal economies, by exploring shifts in purchasing behaviour between 2019 and 2022 among informal and small traders in a 3.5 km radius around Stock Road in Philippi in the Western Cape.We investigate the spending patterns of 30 social relief distress (SRD) grant recipients and 31 basic education employment initiative (BEEI) participants in the same area in order to reveal that the main linkage between formal and informal economies are hybrid wholesalers and supermarkets.
    Keywords: Afrique du Sud
    JEL: Q
    Date: 2023–03–22
  3. By: Djihad, Tria; Harun, Mukaramah; Alam, Md. Mahmudul (Universiti Utara Malaysia)
    Abstract: National governments and their development partners have considered microcredit as a strategic tool for vulnerable populations. Easy access to finance increases the client's ability to invest and allows clients to use resources to change their behaviour, increase their business opportunities and create employment. This paper aims to review studies that focused on microcredit and employment issues affecting beneficiaries, including gender-based employment creation and the informal sector. Through a systematic search of electronic databases and keywords to identify relevant studies, 40 core articles are identified for the period 1998-2021. The results indicate the significant impacts of microcredit on women's employment creation and business revenue of microenterprises in the informal sector. Moreover, a few studies set out to integrate gender employment creation and the informal sector with reference to microcredit. A framework is proposed to address the relationship between employment structure and microcredit. Finally, this study recommends developing a financial social accounting matrix and run empirical analysis on macro modelling such as input-output or general equilibrium modelling. Doing so will help obtain better understanding of how microcredit participation is associated with employment creation in different sectors and different types of household groups.
    Date: 2022–03–08
  4. By: Georges Casamatta (LISA - Lieux, Identités, eSpaces, Activités - UPP - Université Pascal Paoli - CNRS - Centre National de la Recherche Scientifique)
    Abstract: We determine the optimal income tax schedule when individuals both choose endogenously their labor supply and have the possibility of avoiding paying taxes. Considering a convex concealment cost function, we propose a formula for the optimal marginal tax rate, that generalizes the formula of the standard Mirrlees model to the case of tax avoidance. We also show that the results obtained by Casamatta (2021) in the fixed income case hold true when labor supply is endogenous: with a low enough marginal cost of avoidance, it is optimal to let some taxpayers, located in the interior of the skill distribution, avoid taxes.
    Abstract: Nous déterminons le système d'imposition optimale sur le revenu lorsque les individus choisissent de manière endogène leur offre de travail et qu'ils ont de plus la possibilité d'éviter le paiement de l'impôt. Nous considérons une fonction de coût de dissimulation du revenu convexe et proposons une formule pour le taux marginal de taxation optimal, qui généralise la formule du modèle de Mirrlees au cas de l'optimisation fiscale. Nous montrons également que les résultats obtenus par Casamatta (2021) dans le cas d'un revenu fixe restent vrais lorsque l'offre de travail est endogène: lorsque le coût marginal de l'optimisation fiscale est suffisamment faible, il est optimal de laisser certains contribuables, situés à l'intérieur de la distribution des productivités, dissimuler une partie de leur revenu.
    Keywords: tax avoidance optimal income taxation labor supply. JEL: H21 H26, tax avoidance, optimal income taxation, labor supply., JEL classification: H21
    Date: 2021–05–05
  5. By: Sergio Clavijo
    Abstract: Este documento analiza las implicaciones de las reformas pensional y laboral radicadas recientemente por la Administración Petro (2022-2026). Ellas apuntan a establecer un cuasi-monopolio público bajo un sistema de "reparto simple" (Colpensiones), al tiempo que se vuelve más costosa la contratación laboral en horas nocturnas, dominicales y los despidos. Aquí presentamos métricas de informalidad laboral (cercanas al 85% según el PILA), las cuales ilustran la baja probabilidad de lograrse los tiempos mínimos de cotización (sector público) y/o de montos ahorrados (sector privado) requeridos para acceder a una renta vitalicia. También cuantificamos el esfuerzo fiscal requerido para llegar a sustituir por partidas presupuestales los elevados costos no-salariales empresariales, bordeando actualmente el 51% sobre la nómina. Por último, pasamos revista a las alternativas de subsidios permanentes ("renta universal"), temporales (BEPs) y concluimos que la única manera de tenerse soluciones estructuralmente sostenibles, desde la óptica fiscal y laboral, consiste en apuntalar esfuerzos pro-ahorro y formalidad laboral, dejando como complementarios los programas de apoyos asistenciales.
    Keywords: Seguridad Social, Política Pública, Pensiones, LatinoAmérica
    JEL: H55 I38 J26 O54
    Date: 2023–03–31

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