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on Informal and Underground Economics |
| By: | Estephane, Pauline Fady; Haidar, Jamal Ibrahim |
| Abstract: | Using data from 50 economies, we re-examine the role of legal origins in shaping labor regulations and explore the consequences of these regulations on labor market outcomes. We find that civil law countries tend to adopt more protective labor regulations while common law countries emphasize flexible employment regulations. We document that de jure protective labor regulations create barriers to labor market entry while de facto flexible employment regulations have adverse informal employment and labor productivity consequences. Our results suggest that flexible employment regulations without adequate labor protection laws can encourage labor exploitation, reduce labor productivity, and are insufficient to draw firms and workers into the formal sector. |
| Keywords: | legal origins; labor regulations; labor market outcomes; informal economy; productivity; B-READY |
| JEL: | E24 E26 J41 J46 J52 J83 K1 K10 K3 |
| Date: | 2025–11–20 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:127377 |
| By: | Juana Torres-Cierpe (LaborIA - Programme IA - Inria Siège - Inria - Institut National de Recherche en Informatique et en Automatique); Paola Tubaro (CNRS - Centre National de la Recherche Scientifique, ENSAE Paris - École Nationale de la Statistique et de l'Administration Économique - Groupe ENSAE-ENSAI - Groupe des Écoles Nationales d'Économie et Statistique - IP Paris - Institut Polytechnique de Paris, CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - Groupe ENSAE-ENSAI - Groupe des Écoles Nationales d'Économie et Statistique - X - École polytechnique - IP Paris - Institut Polytechnique de Paris - ENSAE Paris - École Nationale de la Statistique et de l'Administration Économique - Groupe ENSAE-ENSAI - Groupe des Écoles Nationales d'Économie et Statistique - IP Paris - Institut Polytechnique de Paris - CNRS - Centre National de la Recherche Scientifique); Antonio A. Casilli (I3 SES - Institut interdisciplinaire de l’innovation de Telecom Paris - Télécom Paris - IMT - Institut Mines-Télécom [Paris] - IP Paris - Institut Polytechnique de Paris - I3 - Institut interdisciplinaire de l’innovation - CNRS - Centre National de la Recherche Scientifique, NOS - Numérique, Organisation et Société - I3 SES - Institut interdisciplinaire de l’innovation de Telecom Paris - Télécom Paris - IMT - Institut Mines-Télécom [Paris] - IP Paris - Institut Polytechnique de Paris - I3 - Institut interdisciplinaire de l’innovation - CNRS - Centre National de la Recherche Scientifique, LACI - Laboratoire d'anthropologie critique interdisciplinaire - EHESS - École des hautes études en sciences sociales - LAP - Laboratoire d’anthropologie politique – Approches interdisciplinaires et critiques des mondes contemporains, UMR 8177 - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | In digital environments, value production involves not only computer developers and engineers, but a broader range of digital subjects – from users to data workers – whose contributions are often occluded from view. We break down their digital labour into its different forms: classification, monetisation and automation in the case of users; and preparation, verification and impersonation in the case of data workers. Far from a simple succession of predefined mechanical tasks, we show that all these forms of work are complex human activities that harness knowledge, skills, personal commitments, moral judgements, emotional elements and bodily dimensions. When we open the black box of AI, what emerges is a plurality of subjects who, through their digital interactions, reveal intimate aspects of their subjectivities and form an essential—though largely overlooked—part of the value chain that sustains this technology. Therefore, any critical reflection on the regulation of AI and its ethical and social implications must recognise the active role played by these digital subjects as co-producers of value and invisible protagonists of the ongoing technological transformation. |
| Abstract: | En los entornos digitales, la producción de valor no solo involucra a desarrolladores e ingenieros informáticos, sino a una gama más amplia de sujetos digitales —desde usuarios hasta trabajadores de datos— cuyas contribuciones a menudo quedan ocultas a la vista. Descomponemos su trabajo digital en sus diferentes formas: clasificación, monetización y automatización en el caso de los usuarios; y preparación, verificación y suplantación en el caso de los trabajadores de datos. Lejos de ser una simple sucesión de tareas mecánicas predefinidas, demostramos que todas estas formas de trabajo son actividades humanas complejas que aprovechan conocimientos, habilidades, compromisos personales, juicios morales, elementos emocionales y dimensiones corporales. Al abrir la caja negra de la IA, lo que emerge es una pluralidad de sujetos que, a través de sus interacciones digitales, revelan aspectos íntimos de sus subjetividades y forman una parte esencial —aunque en gran medida ignorada— de la cadena de valor que sustenta esta tecnología. Por lo tanto, cualquier reflexión crítica sobre la regulación de la IA y sus implicaciones éticas y sociales debe reconocer el papel activo que desempeñan estos sujetos digitales como coproductores de valor y protagonistas invisibles de la transformación tecnológica. |
| Keywords: | Digital labour, Platform work, Micro-work, AI data work, trabajo de datos, microtrabajo, Trabajo de plataforma |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05491713 |
| By: | Hasan Murat ErtuÄŸrul (Anadolu University); Ömer Tugsal Doruk (Adana Alparslan TürkeÅŸ Science and Technology University); Ömer Faruk Tekdogan (University of Ankara) |
| Abstract: | This study investigates the impact of the informal sector on firm performance for over 10.000 nonfinancial firms operating in the 8 MENA countries covering 1997-2020 periods. Using a Panel Dynamic Generalized Method of Moments (GMM), we find that the effect of the informal sector on firm performance is negative. These estimates seem strong according to robustness check. We also do the analysis for SMEs and non-SMEs and find that SMEs are more sensitive to the informal sector. In terms of its findings, the study sheds new light on the MENA region by analyzing the relationship between informal economy and firm performance in a highly heterogeneous manner. |
| Date: | 2025–12–17 |
| URL: | https://d.repec.org/n?u=RePEc:erg:wpaper:1814 |
| By: | Ayoki, Milton |
| Abstract: | This paper examines the opportunities and challenges facing Micro, Small, and Medium Enterprises (MSMEs) engaged in informal cross-border trade (ICBT) at three strategic border locations: Cyanika (Rwanda-Uganda), Mpondwe (DRC-Uganda), and Vvura (DRC-Uganda). Using primary data from stakeholder consultations and secondary data from official trade statistics, we analyze trade flows, operating models, and the unique constraints confronting women traders, who constitute over 70% of the informal trading population. The study reveals that Mpondwe and Vvura collectively account for 33.2% of Uganda's informal export revenue ($188.6 million in 2023), with fish, agricultural products, and manufactured goods dominating trade flows. While the Simplified Trade Regime (STR) and One-Stop Border Posts (OSBPs) have improved formalization rates, significant challenges persist including customs compliance burdens, inadequate infrastructure, regulatory inconsistencies, and gender-based vulnerabilities. Our empirical analysis employs a structural gravity model to estimate trade facilitation effects, demonstrating that behind-the-border costs reduce trade volumes by 23-35%. We find that women traders face disproportionate barriers including sexual harassment, limited access to market information, and inadequate childcare facilities. The paper concludes with targeted policy recommendations for gender-responsive trade facilitation, including mobile testing laboratories, digital trade platforms, and strengthened cross-border trader associations. |
| Keywords: | Informal Cross-Border Trade, MSMEs, Gender, Trade Facilitation, East African Community, Gravity Model |
| JEL: | F14 F15 J16 L26 O17 O55 |
| Date: | 2025–12–12 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:127325 |
| By: | Marcela Meléndez; Nicolas Peña Tenjo; Laura Tenjo |
| Abstract: | Colombia has a complex legal framework meant to protect the population against basic risks through a combination of contributory and non-contributory social insurance. The population is almost perfectly split between them, with eligibility to participate in the latter determined by poverty. Health insurance works relatively well under both. In contrast, protection against old age works poorly. Only 20 out of every 100 workers fulfil the requirements for a contributory pension because of a high informality rate (56 per cent) and frequent worker transitions in and out of formality. |
| Keywords: | Colombia, Social protection, Insurance, Social assistance, Labour market |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:unu:wpaper:wp-2026-9 |
| By: | Beatriz Muriel H. (Directora Ejecutiva de INESAD); Alejandro Herrera J. (Investigador asociado de INESAD); M. Cecilia Lenis A. (Investigadora junior de INESAD) |
| Abstract: | This paper uses a multidimensional framework that incorporates constraints of accessibility, affordability, and acceptability to examine the determinants of effective access to the contributory component of Bolivia’s pension system. Using nationally representative household surveys from 2005 and 2019, we evaluate the influence of labor-market segmentation, financial capacity, informational barriers, and sociocultural factors on workers’ likelihood of affiliation. To address key empirical challenges, including nonlinearity, non-random selection into employment, and perfect or near-perfect prediction, we estimate Probit, Heckprobit, and Firth–Logit models and compute gender-specific average marginal effects. The results indicate persistent structural barriers across periods and settings. Self-employment, unpaid work, and low or unstable earnings consistently reduce affiliation. Informational constraints and distrust were decisive in 2005, while digital access became a critical determinant by 2019. Sociocultural factors, particularly Indigenous identity, also emerged as significant acceptability constraints in the later period. Gender differences in affiliation mainly reflect disparities in employment status, income, and access to information, rather than heterogeneous behavioral responses. Overall, the findings underscore the need for integrated policies that address informational gaps, financial constraints, and labor-market segmentation to bolster access to the contributory component of Bolivia’s pension system. |
| Keywords: | Pension systems, social protection, informality, labor markets, gender gaps, access barriers, selection models, nonlinear probability models. |
| JEL: | J26 H55 J21 C35 D14 O54 I38 J16 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:adv:wpaper:202509 |
| By: | Sinha, Harshita; Gallien, Max; Van Den Boogaard, Vanessa |
| Abstract: | Over the last decade, there has been growing global pressure to build digitised social protection systems as a means of enhancing access to welfare. This article explores one such case: ‘e-Shram’, a digital registration platform introduced in India in the aftermath of the COVID-19 pandemic. Emerging as a direct consequence of the hardships faced by informal workers during the pandemic, the article examines e-Shram in this context. It observes that while e-Shram is increasingly portrayed as the first step towards a comprehensive formalisation programme, it fails to address the main gaps and issues highlighted by the pandemic; it provides some registration but maintains substantial deficiencies in service provision. This case study underscores why formalisation should be understood as a multidimensional process, and consequently, why it is important to separate it from particular instances of ‘narrow formalisation’ – commonly formalisations of governance, but not necessarily of work. This analysis carries broader implications for countries pursuing formalisation through digital platforms, emphasising the need for policies that align state objectives with genuine improvements in social and economic protections for informal workers. |
| Keywords: | digitalisation; e-Shram; India; informality; registration; social protection |
| JEL: | R14 J01 |
| Date: | 2026–02–09 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:130906 |
| By: | Andrés García-Suaza (Universidad del Rosario); Carlos Sepúlveda-Rico (Universidad del Rosario); Pamela Caiza-Guamán (Universidad del Rosario) |
| Abstract: | The green transition is expected to be one of the most significant forces shaping labor markets in the incoming years. As economies shift toward cleaner technologies, green jobs will expand, while employment in high-emission sectors will either decline or move into other sectors, depending on skill transferability and policy design. In this context, the ability of workers to transition between green and non-green jobs will be crucial to ensure a just labor market adjustment. Labor transitions into and out of green jobs remain understudied, particularly in developing economies where data constraints limit empirical analysis. This paper addresses this gap, using household survey data and a synthetic panel approach to estimate the probability of labor transitions employs a skills-based green index. The results reveal a high degree of labor market persistence, explained by the role of skills in shaping mobility, and show a wage premium of 10.6% for green occupations compared to their non-green counterparts. These findings have important policy implications for ensuring a just energy transition. Given the observed rigidities in green labor mobility, targeted upskilling and reskilling programs are important to enabling non-green workers to acquire the necessary skills for green jobs. |
| Keywords: | Labor mobility; Wage inequality; Just transition; Informality |
| JEL: | J21 J24 Q52 J62 |
| Date: | 2025–11–18 |
| URL: | https://d.repec.org/n?u=RePEc:col:000092:022159 |
| By: | Kharazi, Aicha (University of Warwick); Lu, Saite (University of Cambridge); Mustafa, Ghulam (University of Derby & London School of Economics and Political Science) |
| Abstract: | Public support for raising minimum wages as a policy response to economic inequality is increasing; however, empirical evidence from highly informal and weakly regulated labour markets remains limited. This study estimates the impact of minimum wage increases on earnings and hours worked in Pakistan, drawing on 21 waves of nationally representative Labour Force Survey data between 1992 and 2021. By leveraging national time variation in statutory minimum wages and pre-policy district exposure, proxied by the proportion of workers earning below the minimum wage prior to policy changes, we find that increases in the minimum wage are associated with statistically significant but modest gains in real hourly earnings, with stronger wage pass-through observed in local labour markets with higher initial exposure. The benefits are disproportionately greater for male workers; however, the policy has achieved only limited and uneven progress in reducing gender pay disparities. On the intensive margin, minimum wage increases are associated with reductions in hours worked, particularly among women. This pattern is consistent with adjustment through hours in segments characterised by part-time work and weaker compliance. Overall, the findings indicate that minimum wage policy can increase earnings in low-wage areas under conditions of partial compliance, yet has limited capacity to address persistent structural gender inequality in highly informal contexts. These results underscore the need for stronger enforcement and complementary, gender-sensitive labour market interventions |
| Keywords: | minimum wage ; hourly earnings ; hours worked JEL codes: J22 ; J31 ; J38 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:wrk:warwec:1597 |
| By: | Sato, Hideki |
| Abstract: | This study addresses the following two questions focusing on state sales tax and the behavior of a monopolist: (1) Under what conditions would a monopolist evade state sales tax even if evasion is costly? and (2) Can tax rates and enforcement be effective deterrents against evasion? The analysis reveals that, under certain conditions, a monopolist facing enforcement may underreport sales rather than not report them at all, even if evasion incurs costs. Furthermore, this study demonstrates that reducing tax rates and strengthening enforcement can effectively prevent tax evasion and that such preventive measures can lead to increased tax revenue. |
| Keywords: | Sales tax, Monopolist, Tax evasion, Tax enforcement. |
| JEL: | D42 H26 H32 H71 |
| Date: | 2025–12–22 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:127426 |
| By: | Rodríguez Núñez, Juan Bautista |
| Abstract: | This paper explores the relationship between informal employment and monetary poverty in the Dominican Republic, focusing on the structural factors that link both phenomena. Informal workers often lack social protection, face low productivity, and earn subsistence-level wages, trapping them in a cycle of poverty. The study draws from various theoretical frameworks, including Dualist, Institutional, Structuralist, and Voluntarist perspectives, to explain the persistence of informality. It highlights that low education levels and inadequate access to capital are significant determinants of informal employment and poverty. Empirical evidence demonstrates that informal employment exacerbates poverty, as workers in this sector often lack access to financial resources, healthcare, and social protection. Additionally, some workers voluntarily choose informal employment to avoid taxes and regulations in exchange for flexible labor conditions. The findings suggest that structural reforms, including changes in labor laws, social protection expansion, and promotion of technical education, are necessary to address the root causes of informal employment. In conclusion, this paper emphasizes the need for sustainable public policies that foster formal employment opportunities, reduce poverty, and improve the socio-economic conditions of workers in the informal sector. |
| Keywords: | Informal employment, poverty, labor laws, social protection, Dominican Republic |
| JEL: | I32 J23 J46 O17 |
| Date: | 2024–11–11 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:123537 |
| By: | Renan P. Almeida; Luiz A. Paixão; Ana Luiza Nabuco; Marcelo de B. Brandão |
| Abstract: | O aumento global de famílias residindo em imóveis alugados está associado a transformações nos mercados imobiliários, como a ascensão de investidores buy-to-rent de larga escala, a elevação dos preços dos imóveis e a insuficiência de políticas habitacionais. Paralelamente, a informalidade em contratos de aluguel e a evasão fiscal nesse segmento tornam-se temas relevantes, ainda pouco explorados. A evasão fiscal da renda auferida dos alugueis afeta o desenvolvimento de empresas imobiliárias e a arrecadação tributária, em um contexto em que contratos diretamente com proprietários ou alugueis sem contratos aumentam a probabilidade de evasão. Diante disso, este artigo realiza uma revisão bibliográfica abrangente sobre evasão fiscal em mercados residenciais de aluguel. Analisam-se aspectos institucionais que regem contratos e tributações, e buscam-se mensurações da extensão desse fenômeno em diversos países, com base em fontes em quatro idiomas (inglês, espanhol, português e italiano). Os resultados indicam níveis elevados de evasão da renda do aluguel residencial, mesmo em países desenvolvidos, com perdas anuais de bilhões em receita tributária e atrofia de empresas do segmento. Nesse cenário, novas políticas públicas de combate à evasão desse tipo de renda têm sido experimentadas globalmente, como mecanismos de detecção, “nudges” e incentivos que casam políticas habitacionais e tributárias. |
| Keywords: | aluguel; Evasão fiscal; mercado imobiliário; políticas públicas; Public Policies; Real Estate Market; Rent; Tax Evasion; Taxation; Tributação |
| JEL: | R3 |
| Date: | 2025–01–01 |
| URL: | https://d.repec.org/n?u=RePEc:lre:wpaper:lares-2025-105 |