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on Informal and Underground Economics |
| By: | Benider Elmehdi (Faculté des Sciences Juridiques, Economiques et Sociales, Salé); Asmae Benthami (Faculté des Sciences Juridiques, Economiques et Sociales, Salé) |
| Abstract: | The persistence of the informal economy poses a structural challenge for developing economies, both in terms of its scale and its implications for growth, employment, and government tax revenues. Although widely documented, understanding of its macroeconomic drivers remains incomplete, particularly with regard to the nature of the dynamic relationships between the informal economy and its explanatory factors. In this perspective, the adoption of econometric approaches capable of simultaneously capturing interdependencies and adjustment mechanisms is particularly relevant. Using macroeconomic data on Morocco covering the period 1993–2020, this study employs an ARDL (Autoregressive Distributed Lag) model to examine the interactions between the informal economyand its main determinants. The objective is to provide empirical insights that can enrich the academic debate and inform the discussion on formalization policies adapted to Morocco's economic realities. This work contributes to the literature by emphasizing the importance of identifying the determinants of the informal economy as a prerequisite for any formalization strategy. |
| Abstract: | La persistance de l'économie informelle constitue un défi structurel pour les économies en développement, tant par son ampleur que par ses implications sur la croissance, l'emploi et les recettes fiscales de l'État. Bien que largement documentée, la compréhension de ses ressorts macroéconomiques demeure incomplète, notamment quant à la nature des relations dynamiques qui lient l'économie informelle à ses facteurs explicatifs. Dans cette perspective, l'adoption d'approches économétriques capables de capturersimultanément les interdépendances et les mécanismes d'ajustement s'avère particulièrement pertinente. En s'appuyant sur des données macroéconomiques relatives au cas marocain couvrant la période 1993–2020, ce travail mobilise un modèle ARDL (Autoregressive Distributed Lag) afin d'examiner les interactions entre l'économie informelle et ses principaux déterminants. L'objectif est d'apporter un éclairage empirique susceptible d'enrichir le débat académique et d'alimenter la réflexion sur des politiques de formalisation adaptées aux réalités économiques du Maroc. Ce travail contribue à la littérature en mettant l'accent sur l'importance d'identifier les déterminants de l'économie informelle comme préalable à toute stratégie de formalisation. |
| Keywords: | ARDL model., tax revenues, employment, economic growth, croissance économique, Economie informelle, G20, modèle ARDL., recettes fiscales, emploi |
| Date: | 2026–02–19 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05517999 |
| By: | Tonetto, Jorge Luis; Fochezatto, Adelar; Pique, Josep Miquel; Rapetti, Carina |
| Abstract: | The state of Rio Grande do Sul, Brazil, implemented four behavioral experiments aimed at improving tax compliance. This study contributes to the literature by examining multiple behavioral tax programs over an extended period, providing a longitudinal assessment of citizen engagement. It highlights changes in citizen engagement in the Tax Education Program and their possible causes, focusing on the evolution of new subscribers over time and their relationship with the implementation of innovative projects. We estimate time-series regression models for new subscribers between November 2012 and May 2023, including specifications with and without structural breaks. The results show three moments of high impact on subscriber numbers. The key moment corresponds to the launch of Devolve-ICMS and Receita Certa, with a 635% increase in new subscribers. Inflation showed a small negative impact. Reductions in prize amounts and low-value incentives negatively affected engagement. Programs that provided direct and visible financial returns to citizens—reinforcing perceptions of fairness and reciprocity in the tax system—showed particularly strong effects on engagement. The findings suggest that tax innovations were successful in increasing citizen engagement and, consequently, reducing tax evasion. |
| Keywords: | Behavioral economics; Tax compliance; Technological Change; Time series analysis; Public policy; Brazil JEL Codes: D91, H26, O33, C22, H11, O54 |
| JEL: | C22 D91 H11 H26 O33 O54 |
| Date: | 2026–02–25 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:128174 |
| By: | Ragui Assaad; Irene Selwaness |
| Abstract: | The paper examines the structure of the social protection system in Egypt including its contributory and non-contributory components. It begins by examining the historical evolution of the system, its scale and reach, and its sources of financing. The chapter then assesses the de jure and de facto coverage of the system and the adequacy of payments for different kinds of workers and socio-economic groups. |
| Keywords: | Social protection, Non-contributory pensions, Formal and informal, Egypt |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:unu:wpaper:wp-2026-27 |
| By: | Piotr Dybka; Magdalena Karska; Maciej Łopusiński; Andrzej Torój |
| Abstract: | We estimate the personal income tax (PIT) gap in Bulgaria using the Pissarides and Weber (1989) methodology (“traces of true income” approach), which compares the relationship between food expenditure and income of self-employed and other employees. Our analysis relies on a unique anonymized dataset prepared by the National Statistical Institute from Household Budget Survey and National Revenue Administration records, providing a more reliable measure of income than survey data alone. Extending the standard PW framework, we estimate under-reporting not only among the self-employed but also among private-sector employees. Our results show that unreported labour income averaged 6.37% of GDP during 2017–2021 (excluding 2020), with private-sector employees contributing 5.36% and the self-employed 1.01%. The PIT gap amounted to 13.8% of theoretical revenues, while the social security contribution gap reached 16.5%, corresponding to lost revenues of 0.54% and 1.71% of GDP, respectively. Moreover, our analysis also shows that households with children and younger earners are more prone to under-reporting. These findings underscore the importance of accounting for household characteristics when designing policies to mitigate tax non-compliance. |
| Keywords: | Shadow economy, PIT gap, PIT, Tax gap |
| JEL: | C51 E26 H21 H26 O17 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:sgh:kaewps:2026119 |
| By: | Piotr Dybka; Stanisław Bartha; Anna Komisarska; Michał Kowalczuk |
| Abstract: | The goal of this paper is to estimate the level and provide a sectoral decomposition of the VAT gap in Bulgaria based on the unique dataset provided by the National Revenue Agency in Bulgaria (NRA). We focus on the output VAT gap. Our potential VAT estimate takes into account the value of output VAT based on the estimate of sales. Our study also seeks potential macroeconomic factors that affect the VAT gap and obtained results indicate that a higher VAT gap can be associated with a larger share of micro enterprises, changes in the business cycle (i.e. increase in firm death rate and unemployment). Moreover, firms with higher shares of revenues from sales to government observe markedly lower output VAT gap. In Bulgaria, the largest share of the VAT gap in overall value of VAT is observed in the trade sector, followed by the information and communication sector and professional, scientific, and technical activities. |
| Keywords: | Shadow economy, VAT gap, VAT, Tax gap |
| JEL: | C51 E26 H21 H26 O17 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:sgh:kaewps:2026118 |
| By: | Michał Król; Andrzej Torój |
| Abstract: | Currency Demand Analysis – one of the most popular macroeconometric techniques of shadow economy (SE) measurement – builds on equation explaining the share of cash in circulation in broader monetary aggregates, estimated as time series or panel regression. In the latter case, the homogeneity of slopes between panel units is usually assumed. We demonstrate that the data clearly reject this assumption with Pesaran-Yamagata test, and the resulting peril is using estimates obtained from inconsistent estimation for SE calculation. Due to an adverse T/N ratio, we refrain from using random coefficient or mean group estimators and propose the application of Regression Clustering and Classifier-Lasso procedures, splitting the sample in cross-sectional dimension into a limited number of homogeneous-coefficient groups, considerably smaller than N, whose number or composition remain unknown in advance. For both 2-group and 3-group partitioning, we find substantial differences between the relevant slopes, including the slopes of SE determinants impactful for SE measurement. Notably, a group dominated by Sub-Saharian and Central Asian economies exhibits higher sensitivity to all potential SE determinants: unemployment & inactivity rate, self-employment frequency and government effectiveness. |
| Keywords: | shadow economy, Currency Demand Analysis, panel heterogeneity, regression clustering, Classifier-Lasso |
| JEL: | C23 C51 E26 H26 O17 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:sgh:kaewps:2025106 |
| By: | Olena Havrylchyk (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, UP1 - Université Paris 1 Panthéon-Sorbonne) |
| Abstract: | Central Securities Depositories (CSDs) form the backbone of financial market infrastructure by registering securities, settling trades, distributing cash flows, and managing collateral. While often regarded as mere financial "plumbing, " they in fact underpin strategic objectives such as advancing the Savings and Investment Union, curbing tax evasion, and reinforcing Europe's geopolitical stance. The academic and policy debate on CSDs is fragmented across three strands of literature that rarely intersect. From a regulatory perspective, concerns focus on the persistent fragmentation of the EU CSD market. From a political economy perspective, omnibus accounts and opaque custody chains are criticized for facilitating tax evasion. From a geopolitical perspective, Euroclear – the EU's largest International CSD – has been thrust into the spotlight for its central role in immobilizing and freezing Russian assets after the 2022 invasion of Ukraine. This Paper brings these three strands of literature together to identify and analyze the key challenges facing European policymakers. |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:hal:cesptp:hal-05406605 |