nep-iue New Economics Papers
on Informal and Underground Economics
Issue of 2023‒06‒26
three papers chosen by
Catalina Granda Carvajal
Universidad de Antioquia

  1. Digitalization against the shadow economy: evidence on the role of company size By Bálint Ván; Csaba G. Tóth; Gábor Lovics; Katalin Szõke
  2. Improving Health and Safety in the Informal Sector: Evidence from a Randomized Trial in Bangladesh By Islam, Asad; Lee, Wang-Sheng; Triyana, Margaret; Xia, Xing
  3. Belgium: Technical Assistance Report-Revenue Administration Gap Analysis Program–The Value Added Tax By International Monetary Fund

  1. By: Bálint Ván (Ministry of Finance); Csaba G. Tóth (KRTK KTI and CIAS); Gábor Lovics (Hungarian Central Statistical Office); Katalin Szõke (Central Bank of Hungary)
    Abstract: Online cash registers (OCRs) are important tools for reducing the size of the shadow economy. This paper analyzes the impact on reported turnover and tax liability of introducing OCRs in Hungary using a fixed-effects panel and event study model. We identify strong size-related heterogeneity in the retail and the accommodation and food services sectors: smaller companies increased their reported turnover more than larger ones. Since large companies pay the dominant part of value-added tax, the effects on the payment of this tax were mitigated. We find significant spillover effects in both sectors, which are slightly stronger among larger companies.
    Keywords: Value-Added Tax, Tax Evasion, Shadow Economy
    JEL: E26 H25 H26
    Date: 2022–12
  2. By: Islam, Asad (Monash University); Lee, Wang-Sheng (Monash University); Triyana, Margaret (Nanyang Technological University, Singapore); Xia, Xing (affiliation not available)
    Abstract: Workers in small businesses in low- and middle-income countries are exposed to significant risks of occupational accidents and illnesses. A safe and healthy workplace could improve the productivity and sustainability of the business. In this paper, we conduct a randomized controlled trial in Bangladesh that provides informal firms with information on occupational health and safety (OHS) to improve their workplace practices. The intervention comprised two treatment arms: one focused solely on OHS training (the OHS arm), while the other offered business training and access to financing in addition to OHS training (the OHS+Biz arm). After two years, treated firms showed improvements in business practices, particularly those related to safety and a decent work environment. Moreover, both treatment arms experienced increased output and sales revenue. The OHS+Biz arm generally had no additional impact on firm outcomes compared to the OHS arm, suggesting that OHS information is the primary factor driving safer and healthier workplaces, which consequently can lead to better firm outcomes.
    Keywords: occupational health and safety, enterprise training, randomized controlled trial, informal economy, information, credit access
    JEL: J28 C93 J81 I15 M53 J24 O14
    Date: 2023–05
  3. By: International Monetary Fund
    Abstract: This report presents the results of applying the RA-GAP VAT gap estimation methodology to Belgium for the period 2011-2021. The Revenue Administration Gap Analysis Program (RAGAP) methodology employs a top-down approach for estimating the potential Value-Added Tax (VAT) base, using statistical data on value-added generated in each sector. There are two main components to this methodology for estimating the VAT gap: 1) estimate the potential VAT collections for a given period; and 2) determine the accrued VAT collections for that period. The difference between the two values is the VAT gap.
    Date: 2023–05–17

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