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on Informal and Underground Economics |
| By: | Rafael Dix-Carneiro; Pinelopi Koujianou Goldberg; Costas Meghir; Gabriel Ulyssea; Pinelopi Goldberg |
| Abstract: | We examine the effects of international trade in the presence of a set of domestic distortions giving rise to informality, a prevalent phenomenon in developing countries. In our quantitative model, the informal sector arises from burdensome taxes and regulations that are imperfectly enforced by the government. In equilibrium, smaller, less productive firms face fewer distortions than larger, more productive ones, potentially leading to substantial misallocation. We show that in settings with a large informal sector, the gains from trade are significantly amplified, as reductions in trade barriers imply a reallocation of resources from initially less distorted to more distorted firms. We confirm findings from earlier reduced-form studies that the informal sector mitigates the impact of negative labor demand shocks on unemployment. Nonetheless, the informal sector can exacerbate the adverse real income effects of economic downturns, amplifying misallocation. Last, our research sheds light on the relationship between trade openness and cross-firm wage inequality. |
| Keywords: | trade liberalization, misallocation, distortions, informality |
| JEL: | F14 F16 J46 O17 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11873 |
| By: | Felix Degenhardt (University of Potsdam, CEPA, BSoE); Jan Sebastian Nimczik (ESMT Berlin, RFBerlin, IAB, IZA) |
| Abstract: | We examine whether gig jobs in online food delivery (OFD) are a stepping stone for refugees entering the Austrian labor market. Our identification strategy combines the quasi-random assignment of refugees to Austrian regions with the expansion of gig firms across the country. The local availability of OFD jobs at the time of access to the labor market initially accelerates job finding among refugees. Subsequently, however, gig workers remain in low-paid, unstable jobs with low career prospects, while the employment rate of refugees without gig opportunities catches up. The local availability of gig jobs negatively affects human capital investments and job search behavior, even among refugees outside the gig economy. |
| Keywords: | gig work, refugees, employment restrictions, labor market integration |
| JEL: | J15 J61 J81 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:pot:cepadp:89 |
| By: | Jasmin Vietz; Ingrid Hoem Sjursen |
| Abstract: | Non-state actors, such as religious institutions and leaders, play a central role in governance and social life in many low- and lower-middle-income countries. We examine whether information about how tax revenues are used for public goods and service provision increases voluntary tax compliance, and whether religious leaders can serve as more effective senders of this information than tax officials. Using a lab-in-the-field experiment in Tanzania, we find that providing information increases participants’ compliance, but only when delivered by a religious leader. These findings highlight the potential of religious leaders in enhancing tax compliance where trust in state institutions is limited. |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ifowps:_415 |