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on Informal and Underground Economics |
| By: | Annalisa Tassi; Adrien Bussy |
| Abstract: | We investigate whether firms engage in VAT evasion at the retail stage—typically a point of weakness in VAT systems—in a high-enforcement, low-informality setting. To measure evasion, we exploit a reform of VAT rules (the reverse charge, RC) whereby retailers do not only remit taxes on their own value-added, but on that created along the entire supply chain, increasing their incentive to evade. Using German administrative firm-level VAT return data and an instrumental variable approach based on RC’s staggered introduction, we find no evidence of greater evasion under RC. Our results suggest that evasion at the retail stage might not be quantitatively important in high-enforcement and low-informality settings, implying little need to enlist consumers in tax enforcement to boost tax compliance. |
| Keywords: | Value Added Tax; VAT; Reverse Charge Mechanism; Tax Evasion; Withholding; Last- Mile Problem |
| JEL: | H21 H26 D22 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:fbk:wpaper:2025-05 |
| By: | Adib Rahman (University of Hawaii); Liang Wang (University of Hawaii) |
| Abstract: | We investigate the effects of central bank digital currency (CBDC) issuance in an economy where individuals can evade taxes by using cash. Our tractable model features agent heterogeneity with unobservable idiosyncratic shocks and voluntary exchange, where CBDC and cash compete as payment methods. CBDC's transparency enables governments to collect a labor tax that proves non-distortionary in our quasi-linear environment. Agents with higher marginal utility voluntarily pay fixed fees to access interest-bearing CBDC when their debt constraints bind, allowing the implementation of optimal policy with strictly positive inflation and nominal interest rates. We demonstrate how CBDC enables redistribution between agent types that is not possible in cash-only economies. We conjecture that an optimal CBDC policy involves higher nominal interest rates and lower inflation compared to cash regimes. By reducing tax evasion incentives, the introduction of CBDC can increase both output and aggregate welfare. |
| Keywords: | Cash, CBDC, Labor Tax, Tax Evasion, Monetary Policy |
| JEL: | E42 E58 H21 H26 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:hai:wpaper:202505 |
| By: | Souleymane Faye; Sarah Godar; Carolina Moura; Gabriel Zucman |
| Abstract: | This paper constructs homogeneous time series of global household offshore wealth covering the 2001–2023 period, during which major international efforts were implemented to curb offshore tax evasion. We find that: (i) global offshore wealth remained broadly stable as a fraction of global GDP since 2001, following a sharp increase in the 1980s and 1990s; (ii) the location of offshore wealth changed markedly, with a decline in the share held in Switzerland and a rise of Asian financial centers, the United Kingdom, and the United States; and (iii) a growing fraction comes from developing countries. |
| Keywords: | Tax havens, Tax evasion, Wealth, International investment positions |
| JEL: | H26 H87 E21 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:diw:diwwpp:dp2150 |
| By: | Roll, Michael; Abu Qdais, Hani Ahmad; Kornprobst, Tim Lukas; Abu Jabal, Hussein; Suleiman, Yaser |
| Abstract: | Solid waste management is one of the most pressing urban governance issues in low- and middle-income countries. Because waste volumes are increasing, the associated fiscal, environmental and health costs will also rise. The idea of working with informal waste workers to address this problem is often suggested but rarely implemented. Based on the case of Irbid, Jordan's second-biggest city, we show why it was successful there and draw recommendations for other municipalities. Irbid used an approach that combined what we call "frontloading trust" and "prioritising integration over training". First, the mayor and municipal managers invited informal waste worker representatives to a structured dialogue about waste management challenges in the city, about the role of informal workers, and about potential solutions. During this months-long process, they overcame class differences, stigma and distrust and agreed on how to work together in the future. Then, rather than requiring extensive prior training of informal workers, they started to work together, which allowed workers to show what they were able to contribute ("prioritising integration over training"). Based on this process, the municipality and informal worker representatives signed the first Memorandum of Understanding of its kind in Jordan, legalising the work of informal workers, providing them with official badges and safety equipment and piloting their integration into municipal sorting facilities. After only a few months, data showed that the integration of informal workers had reduced landfill waste, had saved the municipality a lot of money, had improved waste services for residents, and had increased respect, protection and income for informal waste workers. This case shows that challenges like urban waste management require not only technical but social and governance innovations that include rather than exclude informal workers, and that can thereby contribute to improved livelihoods for all concerned. |
| Keywords: | aste management, informal sector, waste workers, adptive reform, PDIA, Irbid, Jordan, urban governance, capacity building, integration |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:idospb:333600 |
| By: | Pius Miri Ng'ang'a; David Khaoya; Precious Zikhali |
| Abstract: | Health subsidization for the poor in Kenya is one of the social protection priority programs for achieving universal health care. This study aimed to develop a proxy means testing (PMT) tool that can be used by the Ministry of Health in Kenya for targeting the poor in health insurance subsidization and to determine the ability of households in the informal sector to pay for social health insurance. To develop the PMT, least absolute shrinkage and selection operator (lasso) regression, which uses a machine learning algorithm, was used for both variable selection and prediction. |
| Keywords: | Targeting, Poverty, Health insurance, Poverty measurement, Kenya |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:unu:wpaper:wp-2025-99 |
| By: | Andrés Ham |
| Abstract: | We analyse the disconnect between the intended design and actual outcomes of Honduras's social protection system. The current framework results in low coverage rates and limited redistribution, and imposes an implicit tax on formal activity. It also discourages productivity-enhancing decisions by workers and firms, contributing to the persistence of high informality and inequality. To address these issues and fulfil the objectives of social protection, we propose reforms which aim to expand coverage, improve equity, and strengthen incentives for workers and firms to comply with norms. |
| Keywords: | Social protection, Redistribution, Reforms, Honduras |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:unu:wpaper:wp-2025-101 |
| By: | Nguyen Quang Thanh (Faculty of Economic Law, University of Economics and Law, VNU-HCM, Vietnam Author-2-Name: Author-2-Workplace-Name: Author-3-Name: Author-3-Workplace-Name: Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:) |
| Abstract: | " Objective - This paper aims to analyze the Vietnamese legal framework on the prevention and abolition of child labor under the influence of the EU–Vietnam Free Trade Agreement (EVFTA). The study explores how EVFTA commitments, particularly those embedded in the Trade and Sustainable Development (TSD) Chapter, shape Vietnam's legal reforms, institutional adjustments, and enforcement responsibilities relating to child labor. Methodology - The research employs a qualitative approach based on analysis, synthesis, and comparison of secondary data, including international conventions, Vietnamese legislation, academic publications, policy reports, and EVFTA provisions. The study examines the interaction between trade law and labor standards using theoretical lenses such as legalization theory and normative diffusion. Findings - The results show that Vietnam has aligned key elements of its domestic legal framework with ILO Conventions Nos. 138 and 182 following the EVFTA. This alignment is reflected in the establishment of a statutory minimum working age, clearer prohibitions on hazardous work, strengthened child protection standards, and increasing attention to child labor data collection. However, significant enforcement challenges persist, including limited inspection capacity, inconsistent administrative reporting, a large informal labor sector, and socio-economic drivers that continue to push children into labor. Novelty - The originality of this study lies in its integrated analysis of Vietnam's child labor regulations within the broader context of new-generation FTAs, highlighting how trade commitments can influence domestic labor governance. The paper contributes a legal-institutional perspective that links EVFTA obligations with practical implementation barriers, offering insights into compliance expectations shaped by recent developments in EU trade policy. Type of Paper - Review" |
| Keywords: | Commitment to abolish child labor; EVFTA; Labor standards; New-generation FTA; Vietnamese law. |
| JEL: | F13 J83 J88 K31 K33 |
| Date: | 2025–12–31 |
| URL: | https://d.repec.org/n?u=RePEc:gtr:gatrjs:jber263 |
| By: | Amrita Golda (Indian Council for Research on International Economic Relations (ICRIER)); Kartik Nair; Md Sarwar Ali; Ritika Verma |
| Abstract: | India's rapid technological growth has significantly increased electronic consumption, resulting in a surge in electronic waste (e-waste) generation. This working paper examines the complexities of India's e-waste supply chain, focusing on key agents involved, such as collectors, dismantlers, refurbishers, and recyclers, with an emphasis on the dominant role of informal players. The analysis is grounded in field surveys conducted in Maharashtra and Karnataka, which were chosen for their high e-waste generation, industrial ecosystems, and green technology developments. The study highlights the environmental hazards of e-waste, including toxic material leakage, while underscoring its potential for resource recovery and contributions to a circular economy. Recycling e-waste can recover critical materials like copper and rare earth elements, aiding India's clean energy transition and reducing dependency on new mining activities. This comprehensive analysis identifies supply chain challenges, proposes an incentive mechanism to improve e-waste management, and provides actionable policy recommendations to address inefficiencies. The study aims to create a more efficient, sustainable, and inclusive e-waste management framework for India by bridging the gap between informal and formal sectors. |
| Keywords: | Circular economy, E-waste management, Informal Economy, Recycling, Environmental Economics, icrier |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:bdc:wpaper:429 |
| By: | Gautam, Ajay Kumar |
| Abstract: | COVID-19 presented unparalleled difficulties for financially disadvantaged renters, limiting their ability to pay for housing. The impact of this crisis on petty landlords, who often provide housing to these precarious renters, is unclear and requires investigation. Utilising data from a survey of 300 households, and focus group discussions (FGDs) with 100 petty landlords, primarily first-generation Scheduled Caste (SC) and Other Backward Class (OBC) owners, this case study examines the effects of the pandemic on petty landlords in urban villages in Delhi, India. The findings highlight the sedimentation of caste in informal rental market spaces: Firstly, it highlights the role of caste-based socio-economic factors in the emergence of petty landlords in relation to dominant caste landlords. Secondly, it examines the circumstances that led to financial strain among marginalised caste landlords during the pandemic and explores how their responses to this stress worsened existing housing challenges for vulnerable tenants. Thirdly, the study reveals that gender also played a significant role in shaping the experiences of petty landlords, with women outnumbering men as proxy landlords in this group. Lastly, the paper explores how state imposed eviction interventions brought the complexities of caste, class, gender and urban marginality to the forefront. |
| Keywords: | Covid-19; caste; India; petty landlords; rental economy; urban villages; coronavirus; COVID-19 |
| JEL: | R21 R31 Z13 R14 |
| Date: | 2024–12–31 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:126535 |
| By: | Goeb, Joseph; Gondwe, Anderson; Salonga, Dinah |
| Abstract: | Groundnut is a key crop for Malawi's agricultural diversification, but smallholder farmers face challenges in accessing structured markets. This study analyzes informal and unstructured market opportunities for the groundnut value chain in Central Malawi. Data from 444 farmers and 160 traders reveals that informal markets function well, with competition leading to better prices for higher quality groundnuts. Farmers benefit from multiple buyers, but few engage in shelling or grading. Recommendations include promoting quality enhancement through extension services, supporting shelling services, and avoiding overly restrictive market regulations to foster market development and value addition. |
| Keywords: | Agribusiness, Agricultural and Food Policy, Community/Rural/Urban Development, Crop Production/Industries, Food Security and Poverty, International Development, Marketing, Supply Chain |
| Date: | 2024–04–01 |
| URL: | https://d.repec.org/n?u=RePEc:ags:maappb:344108 |