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on Informal and Underground Economics |
| By: | Amodio, Francesco (McGill University); Brancati, Emanuele (Sapienza University of Rome); Brummund, Peter (University of Alabama); de Roux, Nicolás (Universidad de los Andes); Di Maio, Michele (Sapienza University of Rome) |
| Abstract: | We estimate the labor market power of over 13, 000 manufacturing establishments across 82 low and middle-income countries around the world. Within local labor markets, larger and more productive firms have higher wage markdowns and pay lower wages. Labor market power across countries exhibits a mild non-linear relationship with GDP per capita, entirely driven by a strong hump-shaped relationship with the share of self-employed workers. Labor market institutions fully account for the hump shape: in countries with unemployment protection, wage markdowns increase with the share of self-employment while the opposite is true in countries without it. We explain this finding through the lens of a simple oligopsonistic labor market model with frictions. Self-employment prevalence correlates with the elasticity of labor supply to the wage paid, and labor market institutions can change the sign of this relationship. |
| Keywords: | labor market power, self-employment, development, labor market institutions |
| JEL: | J20 J30 J42 L11 |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp16823&r=iue |
| By: | Samuel Bryson; Evaristo Mwale; Kwabena Adu-Ababio |
| Abstract: | This paper explores two policy interventions in Zambia, a minimum wage hike in 2018 and an upward revision in the first kink in the progressive income tax schedule in 2017, to examine and compare the impact of minimum wage and tax kink changes on wages and the earnings distribution in the formal and informal sectors. The analysis builds on two thus far separate strands of literature that investigate the effects of minimum wages and bunching around tax kinks in developing countries using Zambian personal income tax data and data from the ILO Labour Force Surveys over the period 2012-21. |
| Keywords: | Personal income tax, Minimum wage, Informality, Zambia |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:wp-2024-10&r=iue |
| By: | Bohne, Albrecht; Koumpias, Antonios M.; Tassi, Annalisa |
| Abstract: | This paper explores the connection between the proliferation of cashless, or e-money, payments and value-added tax (VAT) compliance. We present both visual and descriptive evidence that illustrates a negative correlation between e-money use and VAT evasion, proxied by the VAT compliance gap for countries in the European Union, from 2001 until 2021. We find that increased e-money usage by 100 percentage points (pp) is associated with a reduction in the VAT gap of 0.3pp or 1.92% of the aggregate VAT compliance gap over time. Moreover, we contribute a novel estimate of the causal impact of cashless payments on VAT evasion during the COVID-19 public health emergency. We identify a link between mobility restrictions in the European Union and reductions in VAT compliance gaps, facilitated by changes in payment norms. An estimated rise of 1pp or 5.51% in e-money use results in an 11.9% reduction in the VAT compliance gap. Our findings suggest that changes in transaction payment behavior such as the adoption of cashless payments may yield significantly more tax revenues by curbing non-compliance. Policies aimed at promoting e-money usage and limiting cash circulation are relevant steps forward in this direction. |
| Keywords: | Tax evasion, VAT gap, cashless payments, e-money, mobility restrictions, COVID-19 pandemic |
| JEL: | H26 K42 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:283581&r=iue |
| By: | García-Suaza, Andres (Facultad de Economía Universidad del Rosario); Varela, Daniela (Universidad del Rosario) |
| Abstract: | Monitoring patterns of segregation and inequality at small area geographic levels is extremely costly. However, the increased availability of data through nontraditional sources such as satellite imagery facilitates this task. This paper assess the relevance of data from nightlight and day-time satellite imagery as well as building footprints and localization of points of interest for mapping variability in socioeconomic outcomes, i.e., household income, labor formality, life quality perception and household informality. The outcomes are computed at a granular level by combining census data, survey data, and small area estimation. The results reveal that non traditional sources are important to predict spatial differences socio-economic outcomes. Furthermore, the combination of all sources creates complementarities that enable a more accurate spatial distribution of the studied variables. |
| Keywords: | Remote sensing; Satellite imagery; nightlights; points of interest; spatial segregation; urban footprints; informal housing. |
| JEL: | C21 E26 R12 |
| Date: | 2024–02–13 |
| URL: | http://d.repec.org/n?u=RePEc:col:000092:021025&r=iue |