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on Informal and Underground Economics |
| By: | Brotherhood, Luiz; Da Mata, Daniel; Santos, Cezar; Guner, Nezih; Kircher, Philipp |
| Abstract: | This paper investigates informal employment in Brazil's highly regulated labor market, focusing on the intensive margin of informality within formal firms. Using a comprehensive dataset of labor audits conducted from 1997 to 2012, we find that formal firms caught with informal workers face sustained slower growth. Informal workers are found across firms of all sizes, and their characteristics closely resemble those of formal employees. Building on these empirical findings, we develop a dynamic general equilibrium model where firms balance the flexibility of informality against potential costs. Our framework can be used to explore government policy implications and to examine the impact of audit strategies on informality, output, and workers welfare. |
| JEL: | J01 H20 J2 L11 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:idb:brikps:13864 |
| By: | Papp, Tamás K.; Takáts, Előd |
| Abstract: | The paper shows how tax rate cuts can increase revenues by improving tax compliance. The intuition is that tax evasion has externalities: tax evaders protect each other, because they tie down limited enforcement capacity. Thus, relatively small tax rate cuts, which decrease incentives to evade taxes, can lead to increased revenues through spillovers – creating Laffer effects. Interestingly, cutting de facto tax rates imply increasing de facto or effective tax rates. The model is consistent with the consequences of Russian tax reform, and may provide basis for further thinking about tax rate cuts in other countries. |
| Keywords: | Laffer curve; tax compliance; tax evasion |
| JEL: | F3 G3 |
| Date: | 2024–12–19 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:126682 |
| By: | Ms. Elena D'Agosto; Michael A Hardy; Stefano Pisani; Anthony Siouclis |
| Abstract: | Traditional top-down tax gap assessments identify the size of a tax gap, but not its origins. By extracting more granular information from top-down tax gap assessments, and combining this information with compliance risk management (CRM) techniques, it is possible to: improve the accuracy of CRM techniques; improve the consistency of the likelihood and consequence dimensions of compliance risk assessments; identify emerging areas of tax compliance risk and; better disaggregate the direct and indirect revenue effects of compliance interventions, including the “behavioral component” within the indirect effects. Finally, it is also possible to determine the optimal revenue recovery from each segment of the taxpayer population. |
| Keywords: | tax administration; tax compliance; tax gap; compliance gap; Compliance Risk Management; CRM; direct revenue effect; indirect revenue effect; taxpayer behavioral component |
| Date: | 2025–01–24 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imftnm:2025/003 |
| By: | Karim El Mokri; Idriss El Abbassi; Aomar Ibourk |
| Abstract: | This paper was originally published on cambridge.org This paper explores the (de-)routinisation of employment structure in developing countries, through the case of Morocco. We investigate employment (de-)routinisation from an often-overlooked perspective, aiming to elucidate the interplay between the dynamics of occupational employment composition by the level of routine tasks intensity and two structural aspects: premature deindustrialisation and the prevalence of informal labour. Our findings, based on tertile analysis and regressions, do not fully support the hypothesis of employment structure de-routinisation. At the same time, we could not identify a clear process of routinisation similar to that observed in developing countries undergoing the first stage of the traditional structural transformation process. Rather, we identified an inverted U-shaped pattern in the dynamics of occupational employment, indicative of a rise in intermediate routine-intensive occupations. We emphasise two key factors, with opposite effects that have contributed to this atypical pattern: The first aspect is premature deindustrialisation, which according to our shift-share decomposition, has adversely affected highly routine-intensive jobs, contrasting with the routinisation trend observed in countries that have experienced a more traditional process of structural transformation. The influence of premature deindustrialisation in terms of de-routinisation is somewhat mitigated by the increasing prevalence of occupations demanding intermediate routine tasks, particularly within the services and construction sector. Regarding the second structural aspect – the prevalence of informal labour – our three-way interaction model indicates a lower susceptibility of informal jobs to de-routinisation compared to their formal counterparts within the same industry. Consequently, the prevalence of informal employment has slowed down the process of de-routinisation of employment structure. |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:ocp:rpaeco:rpnn_81 |
| By: | Pal, Ankush; Kashyap, Anubhav |
| Abstract: | The COVID-19 pandemic did not create any new problems for the working class in India but amplified those that have been prevalent for ages due to an economic system that prioritises profit. Particularly, the collecting and disposing of garbage in the Indian subcontinent has always been associated with a particular caste group, ranked low in the caste hierarchy of the Hindu social order. Though this system can be traced back to Hindu religious texts, it has long percolated into practice in other faiths, with people who converted from these communities. During the COVID-19 pandemic, the waste collectors living in informal settlements on the peripheries of New Delhi faced a peculiar exclusion from basic infrastructural amenities and the right to work. The parlance of social distancing provided an environment adverse to the manual door-to-door waste collection in which the workers were engaged. As a substitute, the state machinery employed private companies whose modus operandi is not very different from independent waste workers. However, when things were restored to normalcy, the workers continued to find themselves out of work. The Solid Waste Management Act 2016 recognises the rights of waste workers, but they are yet to be enforced. In this paper, we look at the exclusion of the waste workers from accessing the city who, by their profession, are seen as polluting the very city which they keep clean. |
| Keywords: | exclusion; informalisation; reduced mobility; social justice; urbanisation |
| JEL: | R14 J01 |
| Date: | 2025–01–08 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:126540 |
| By: | Kingsley, Obiora; Ozili, Peterson K |
| Abstract: | Using six widely accepted indicators, this study compares the progress made in financial inclusion in Nigeria, Sub-Saharan Africa and the rest of the World, with a view to deducing lessons that each entity can improve upon. We find that Nigeria outperformed sub-Saharan Africa in three indicators of financial inclusion while sub-Saharan Africa did better than Nigeria in one metric. Nigeria and sub-Saharan Africa exceeded the World average in informal borrowings. We also constructed an index of financial inclusion and found that financial institution account ownership, formal borrowing, informal borrowing and debit or card ownership are significant positive determinants of the financial inclusion index. These findings indicate that policymakers in Nigeria and sub-Saharan Africa have significant room for improving their financial inclusion standings towards the global average. We make recommendations on the aspects where policymakers can place their focus in pursuit of this goal. |
| Keywords: | financial inclusion, Nigeria, Sub-Saharan Africa, digital financial inclusion |
| JEL: | G00 G20 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:121548 |
| By: | Hoffmann, Vivian; Murphy, Mike; Kariuki, Sarah |
| Abstract: | Unsafe food imposes significant health and productivity burdens on developing countries. We test the impact of a simple information intervention through which low-income urban consumers in Kenya were provided information about the likelihood that maize flour from the formal and informal sector violated a food safety standard. We find a 42 percent increase in the share of households consuming the similarly priced, lower risk formal sector flour type at follow-up in the treatment group relative to the control group, from a base of 33 percent. The intervention was equally effective for households earning below and above the sample median income level. Our results demonstrate the potential for low-cost interventions to increase the salience of food safety as a product attribute in informal markets or where regulatory enforcement is weak. |
| Keywords: | consumers; food safety; health; households; productivity |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:fpr:ifprid:2305 |
| By: | John Sebastian Tobar-Cruz; Carlos Alberto Ruiz-Martínez |
| Abstract: | Este trabajo explora la relación entre el acceso al crédito y la formalización y el crecimiento de los micronegocios en Colombia. Se utilizan datos de la Encuesta a Micronegocios (EMICRON) del DANE para el periodo 2019-2022, junto con la metodología de Propensity Score Matching y modelos de elección binaria para examinar esta interacción. Los resultados destacan que el acceso al crédito se relaciona de manera positiva y significativa con el crecimiento y la formalización de los micronegocios en las cuatro dimensiones estudiadas: entrada, insumos, producción y tributaria. El análisis incluye una distinción entre créditos otorgados por entidades formales e informales, revelando que los micronegocios con acceso a crédito formal presentan una mayor propensión a la formalización y un crecimiento más pronunciado en comparación con aquellos que acceden a crédito a través de entidades informales. Además, al examinar según el sexo del propietario/a, los micronegocios liderados por mujeres con acceso a crédito formal logran mejores resultados en formalización y crecimiento que los liderados por hombres. Por último, el análisis a nivel departamental revela notables variaciones en los resultados, destacando las disparidades económicas y sociales entre las diversas áreas del país. **** ABSTRACT: This paper explores the relationship between access to finance and the formalization and growth of microbusinesses in Colombia. The study utilizes data from the DANE Microbusiness Survey (EMICRON) for the 2019-2022 period, applying the Propensity Score Matching method alongside binary choice models to analyze this relationship. The findings underscore that access to credit is positively and significantly related to the growth and formalization of these businesses across the four dimensions studied: entry, inputs, production, and taxation. The analysis includes a distinction between financing provided by formal and informal entities, revealing that microbusinesses with access to formal credit exhibit a higher propensity for formalization and achieve more pronounced growth compared to those reliant on informal credit sources. Furthermore, when analyzing by the owner's gender, microbusinesses led by women with access to formal credit demonstrate superior outcomes in formalization and growth compared to those led by men. Finally, the regional-level analyses reveal significant variations in the results, underscoring the economic and social disparities across Colombia's diverse regions. |
| Keywords: | Acceso a crédito, micronegocios, formalización y crecimiento empresarial, crédito formal/informal, género, análisis departamental, Credit access, microbusiness, formalization and business growth, formal and informal credit, gender, regional level |
| JEL: | G21 J16 O16 O17 R11 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:bdr:borrec:1302 |
| By: | Cortés, Darwin (Universidad del Rosario); Londoño, Diana (Universidad del Rosario); Valderrama, Cesar (Universidad del Rosario); Soto, Carolina (Universidad del Rosario); Amaya, Stephany (Universidad del Rosario); Ocampo, Alberto (Universidad del Rosario); Ortiz, Irma (Universidad del Rosario); Triviño, Gabriela (Universidad del Rosario) |
| Abstract: | El documento presenta un análisis exhaustivo de la formalización laboral del servicio doméstico en Colombia. Se presentan datos estadísticos sobre la situación actual, se incluyen perspectivas académicas y experiencias internacionales, y se presentan recomendaciones para mejorar las condiciones laborales, incluyendo incentivos económicos, fortalecimiento de la seguridad social, y mejoras en el acceso a la justicia. El estudio utiliza metodologías mixtas y complementa las bases estadísticas del DANE con encuestas a empleadores y grupos focales con trabajadoras domésticas, ofreciendo una visión integral del problema. Finalmente, se proponen reformas legales y administrativas para promover la formalización. |
| Keywords: | Servicio doméstico; Formalización laboral; Trabajo decente en Colombia |
| JEL: | J28 J41 J46 J71 J81 |
| Date: | 2024–12–05 |
| URL: | https://d.repec.org/n?u=RePEc:col:000092:000319 |