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on Informal and Underground Economics |
| By: | Andrew Bibler; Yuting Gao; Laura Grigolon; Mark J. Tremblay |
| Abstract: | Statutory tariff rates may overstate the tariffs actually paid due to evasion and avoidance. We develop a novel method to estimate tariff compliance and apply it to the 2018 trade war, when several countries imposed retaliatory tariffs on U.S. exports. Estimated compliance falls by 25 percentage points after tariff increases; a one percentage point tariff increase reduces compliance by 1 to 2 percentage points. Compliance is lower for intermediate goods, which often qualify for duty-free treatment, and for differentiated products, whose valuation is more difficult to verify. The decline accounted for approximately $3.5 billion in foregone tariff revenue in 2019. |
| Keywords: | tariffs, taxation, tax compliance, tax evasion, avoidance, trade war |
| JEL: | F13 H20 H22 H26 L10 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12643 |
| By: | Bargain, Olivier (University of Bordeaux); Jara, H. (London School of Economics); Rivera, David (Bordeaux University) |
| Abstract: | Tax–benefit systems in Latin America have expanded alongside social protection, yet persistently high informality continues to constrain fiscal capacity and redistribution. This paper examines how tax policy changes affect formal employment in Bolivia, Colombia, and Ecuador over three periods (2008–2014/15-2019). The multi-country, multi-period design generates multiple quasi-experiments, enhancing external validity relative to studies focused on single reforms. We measure the implicit tax burden of moving from informal to formal work and estimate behavioral responses using grouped estimations robust to treatment heterogeneity. Higher tax burdens on formalization significantly reduce formal employment, with stronger responses concentrated among low-skilled, often self-employed workers facing high social contributions. Counterfactual simulations show that revenue-neutral reforms combining the removal of contribution floors with higher top taxation may simultaneously raise formalization and income tax progressivity, suggesting that expanding redistribution and limiting efficiency costs need not be in conflict in Latin American labor markets. |
| Keywords: | informality, employment, self-employment, tax burden, social contributions, income tax, benefits |
| JEL: | H24 H31 J24 J46 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18621 |
| By: | Alexandre Cunha; Guilherme Gallego; Marcelo Santos; Bernardus Van Doornik |
| Abstract: | This paper studies the labor market impacts of implementing a Universal Basic Income (UBI) in developing economies with large informal sectors. We study an unexpected reform in the unemployment insurance policy in Brazil that tightened the eligi bility criteria for most (but not all) formal workers. We provide evidence that unemployment insurance (UI) benefits reduce formal employment, and this effect is amplified by informality. We then study the consequences of replacing the existing trans fer and UI policies with a universal basic income using a search-and-matching model where workers and firms jointly sort between formal and informal jobs. We calibrate the general equilibrium model to match key moments concerning unemployment, wage, and wealth distributions, as well as the distribution of transfers. Our model captures important trade-offs of UBI in developing countries. While UBI improves incentives to work formally relative to traditional welfare, its implementation raises concerns about financial sustainability due to limited tax revenue. We show that a universal basic in come of nearly $80 for each household per month, which replaces the existing transfer programs and UI benefits, can lead to welfare gains, particularly for less skilled individuals. We show that the increase in formal sector activity helps offset the higher tax burden and is a key channel through which outcomes for low-education groups improve with the reform. |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:bcb:wpaper:646 |
| By: | Hicham El Barouni (UH2C - Université Hassan II de Casablanca = University of Hassan II Casablanca = جامعة الحسن الثاني (ar)); Jamila Ayegou (UH2C - Université Hassan II de Casablanca = University of Hassan II Casablanca = جامعة الحسن الثاني (ar)) |
| Abstract: | L'informalité est une réalité complexe qualifiée par les auteurs parfois de sortie, parfois d'exclusion. Au-delà d'un débat aussi divers qu'il soit sur ce phénomène, une réalité est marquante ; ce qui était au début considéré comme un travail informel temporaire de subsistance s'est développé en une sorte d'entrepreneuriat dit informel illustrant ainsi la théorie de Fields (1990) du passage d'un segment inférieur à un segment supérieur dans l'exercice de l'informalité. Des actions et des politiques ont été préconisé par les institutions internationales et les organismes nationaux pour formaliser cet entrepreneuriat dans un esprit gagnant-gagnant |
| Keywords: | informality, informal entrepreneurship, formalization policies, AI, inclusive entrepreneurship, I, entrepreneuriat inclusif, IA, politiques de formalisation, entrepreneuriat informel, Informalité |
| Date: | 2026–03–16 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05564548 |
| By: | Leites, Martin (Instituto de Economía, Universidad de la República); Ramos, Xavier (Universitat Autònoma de Barcelona); Rodríguez, Cecilia (Instituto de Economía, Universidad de la República); Vilá, Joan (Instituto de Economía, Universidad de la República) |
| Abstract: | We contribute to the very incipient literature that estimates the intergenerational mobility of income from large-scale administrative data using high-quality income data and provide novel evidence of intergenerational income mobility in a middle-income country, Uruguay. Our estimates address the important role of informal labor markets, one of the features of low- and middle-income countries, and a major challenge to obtain unbiased estimates of intergenerational mobility in these countries. We estimate an IRA of 0.292, indicating that persistence is higher in Uruguay than in high-income countries, but lower than in the US. Our results show that (i) informal income increases intergenerational persistence, (ii) intergenerational persistence is higher at the upper half of the distribution, especially at the richest decile, and (iii) intergenerational income persistence is largest among parents and children of the same sex. |
| Keywords: | intergenerational income mobility, informal labor markets, Uruguay, non-linearities |
| JEL: | D31 J62 E26 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18642 |
| By: | Nguyen, Son |
| Abstract: | Climate adaptation planning still treats waste largely as a background service problem, while zero-waste advocacy often frames transformation mainly through mitigation, recycling, or circular economy efficiency. This paper asks: how can zero-waste thinking be translated into a concise, policy-usable framework that helps governments, institutions, businesses, and civic actors integrate waste and resource management into climate adaptation plans? Drawing on regional adaptation guidance, urban resilience literature, research on informal waste workers, and emerging circular economy methods, the paper develops a five-part framework for adaptation planning: risk mapping, waste-stream prioritisation, option design, actor integration, and institutional embedding. The argument is that zero waste should be treated not as a downstream environmental add-on but as an upstream resilience logic that reduces exposure, eases public health burdens, protects infrastructure, and strengthens local livelihoods, especially in climate-vulnerable cities. The paper’s anticipated contribution is threefold: it reframes zero waste as an adaptation strategy; it centres informal waste workers as resilience actors rather than residual labour; and it positions GXS and the Global Zero Waste Forum as ecosystem accelerators capable of convening pilots, peer learning, and policy translation across Asia and beyond. |
| Date: | 2026–05–07 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:fmz9g_v1 |
| By: | Mallett, Richard |
| Abstract: | this research note offers an introduction to and critique of contemporary vehicle financing in Uganda’s motorcycle-taxi (boda boda) industry. Informal workers in this sector have long accessed motorcycles through a daily rental-based system known as kibaluwa. however, over the past15 years a new wave of international asset financers have entered the fray, selling Ugandan moto-taxi riders the tantalising dream of ‘being your own boss’ through hire-purchase (or ‘ride-to-own’) credit schemes. Drawing on original interview- and survey-based data from the Ugandan capital, Kampala, this note drills through the glossy promotional material used to market these products to put forward a more grounded, worker-centred and critical perspective on what it means tobe and become a ‘financially included’ informal worker. It shows that despite delivering lucrative, if temporary, outcomes for riders once they have successfully completed hire-purchase, for the long duration of there payment schedule riders are exposed to new risks, new costs and new pressures. a clear conclusion is reached: for Uganda’s financially included moto-taxis, the powerful allure and rewarding experience of being one’s own boss is very different to the arduous process of becoming one. |
| Keywords: | financial inclusion; fintech; informal economy; motorcycle-taxis; boda boda; Uganda |
| JEL: | R14 J01 F3 G3 J1 |
| Date: | 2026–04–16 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:137831 |
| By: | Chambers, Thomas; Grover, Shalini |
| Abstract: | This article introduces and conceptualises ‘protective care’ – a masculinised and commodified form of caregiving – involving male domestic workers (MDWs) in India. Drawing on ethnographic research, it describes how MDWs negotiate gendered authority within feminized and stigmatised labour. Challenging portrayals of MDWs as passive or silenced, the article highlights constrained agency and efforts to assert masculine respectability. By linking empirical insights from India with debates on ‘caring masculinities’, the article shows how protective care recodes hegemonic norms. Ultimately, protective care emerges as both an adaptation and constraint; it enables assertions of paternal authority in domestic workplaces, but is also a commodity that must be carefully performed to meet expectations of employers within marginalised and informalized labour regimes. |
| Keywords: | India; masculinities; care; caring masculinities; informal economy; paid domestic work |
| JEL: | R14 J01 J1 |
| Date: | 2026–04–15 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:138118 |
| By: | Corwin, Julia |
| Abstract: | Urban scholarship consistently discusses improvisation and heterogeneity as central to urban life in the global South. In this article, I bring together scholarship on urban improvisation and the digital world of smart cities to understand the city as analog. In response to conceptions of the smart city as an uncontested space of technical expertise and efficiency, the analog city recognizes the city as being made and remade through analog labor: hands‐on, relational work responsive to the city around it. I use the example of maintenance and repair work to explore the analog nature of cities, building on years of ethnographic research on electronics repair in Delhi. I follow this labor along two seemingly different scales: local electronics repair in informal shops, and the maintenance of data centers for India's smart cities. Drawing on the north Indian term ‘jugaad’, used to describe circumstances in which nonelite strategies intervene to fix things, I argue that the analog city recognizes a world of things with which we can negotiate and work, but never control. I conclude by reflecting on the importance of embodied relationality to the analog city and speculate on an urban futurity focused on the openness of possibilities for urban life. |
| Keywords: | repair; smart cities; labor; improvisation; urban life; jugaad; India |
| JEL: | R14 J01 |
| Date: | 2026–04–01 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:137251 |