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on Informal and Underground Economics |
| By: | Ellora Derenoncourt (Princeton University and NBER); Francois Gerard (University College London); Lorenzo Lagos (Brown University); Claire Montialoux (Sciences Po) |
| Abstract: | How do minimum wages affect informality? We study the near-doubling of the real minimum wage from 2000 to 2009 in Brazil, where 46% of the workforce is informal. Using labor force surveys covering the informal sector, we show the minimum wage exhibits near full passthrough to informal employees working in formal firms, about half of all informal employees. The formal-to-informal reallocation elasticity with respect to the formal-wage is small: -0.28. Our findings illustrate how minimum wages can positively affect living standards for workers thought beyond the reach of labor law, a sizable share of the workforce in developing economies. |
| Keywords: | Brazil |
| JEL: | J23 J46 J88 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:pri:cepsud:351 |
| By: | Julio López-Laborda |
| Abstract: | Los datos que calculamos o conocemos sobre cómo contribuye el IRPF a reducir la desigualdad en la distribución de la renta entre las personas o los hogares están basados habitualmente en la renta declarada y el impuesto pagado por los contribuyentes. Pero, en presencia de evasión, estos resultados no se corresponden con la realidad, porque la renta declarada no coincide con la renta realmente obtenida por los contribuyentes. En este trabajo mostramos que, si la elasticidad de la evasión con respecto a la renta verdadera de las personas es mayor o igual que uno, la desigualdad “real” de la renta después del IRPF (esto es, la desigualdad medida en relación con la renta real y no con la declarada por los contribuyentes) es mayor que la desigualdad “observada” (la calculada con la renta declarada). También se discute bajo qué condiciones la desigualdad real es mayor que la desigualdad “potencial” (la que podría alcanzarse en ausencia de evasión en el IRPF), así como la relación entre la desigualdad potencial y la observada. |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:fda:fdaddt:2026-09 |
| By: | Shi, Yingxin; Shi, Xinyu |
| Abstract: | We exploit the staggered, province-level rollout of China's Fully Digitalized Electronic Invoice (the Shu-Dian- Piao, or FDEI) between late 2021 and 2023 to identify how invoice digitalization affects firms' formal compliance costs and tax compliance, and-most importantly-how these effects are distributed across parties with different bargaining power. Using firms in regions that never opened an FDEI issuance pilot within the window as controls and the Callaway and Sant'Anna (2021) estimator, which is robust to heterogeneous treatment timing, we document three findings. First, on average, firms' administrative- expense ratio rises by about 0.26 percentage points after treatment, with no detectable pre-trend; audit fees, financial-expense ratios, and top-five supplier/customer shares do not change significantly. Second, the increase is highly concentrated: it is about 0.33 percentage points for non-state-owned firms and 0.40 percentage points for small firms, while it is insignificant for state-owned and large firms. Third, tax compliance, measured by book-tax differences, the Desai-Dharmapala residual, and effective tax rates, does not improve on average or in any ownership/size subgroup. The claim robustly supported by the data is therefore the asymmetric incidence of formal compliance costs toward weaker market participants-not the stronger claim that compliance improvement is "decoupled" from compliance costs. The evidence should be read as short-run and conservative, given the concentration of treatment in 2023, the short post-period, and nationwide spillovers from the separately rolled-out receipt side. |
| Keywords: | electronic invoice, tax administration, compliance cost, incidence, staggered difference-in differences, China |
| JEL: | H26 H32 K34 O17 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:esprep:344060 |
| By: | Barja, Gover |
| Abstract: | This paper examines how business environment pressures, firm capabilities, and establishment scale are related among formal enterprises operating under economic stress. Using the 2025 Bolivia Enterprise Survey, it estimates a survey-weighted path analytic structural equation model linking infrastructure stress, intensity of regulatory and tax interaction with the state, informal competition, and political instability to formal finance, adaptive, technology and standards, and digital transactional capabilities, and subsequently to sales and employment. The preferred model uses 567 establishments. Digital transactional capability, measured by electronic receipt of sales, is positively associated with both sales and employment and remains robust across alternative digital measures, the small-firm subpopulation, corruption controls, and trade extensions. Informal competition is negatively associated with digital transactions and has negative total associations with both outcomes. Formal finance and adaptation are particularly related to employment, while technology and standards are more closely related to sales. Greater interaction with the state is positively associated with formal capabilities and establishment scale, a relationship that remains distinct from corruption. International market integration adds explanatory content for sales without eliminating the digital transaction result. By contrast, the capability structure does not explain recent sales or employment growth. The findings support a framework for capabilities under stress in which heterogeneous external pressures are associated with distinct capability profiles rather than a uniform deterioration in firm performance. Because the data are cross-sectional, the estimated paths are interpreted as conditional associations rather than causal effects. |
| Keywords: | Firm capabilities, business environment stress, informal competition, digital payments, establishment scale, Bolivia |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:esprep:344033 |
| By: | Haldar, Stuti (CIRCLE, Lund University); Peddibhotla, Ananya (Department of Urban Planning and Public Policy, University of California, Irvine); Bazaz, Amir (Indian Institute for Human Settlements) |
| Abstract: | India's commitment to net zero by 2070 has sparked a significant energy transition, prompting policy shifts and infrastructure reconfigurations. This paper explores these transitions within Mumbai's electricity sector, focusing on the informal settlements, where nearly 41 percent (approx. 9 million people) of the city's population resides. Two competing narratives are at play here: top-down imaginaries frame slums as infrastructural disruptions, while grassroots movements emphasize energy justice and livelihood security. We use an inductive case study approach to examine institutional work practices in Mumbai's highly regulated and privatized electricity sector and explore how slum communities resist exclusion and challenge dominant infrastructure narratives. By analysing micro-cases of informal settlements, we show how grassroots action can reshape exclusionary electricity infrastructures and align energy transitions with justice outcomes. Our findings reveal that energy justice for marginalized communities requires creating dynamic spaces for contestation outside of rigid regulatory frameworks. We contribute to the broader understanding of energy transitions as socio-technical processes that intersect with issues of inequality, exclusion, and the risks associated with the twin crises of climate change and energy as an input for development. |
| Keywords: | Energy justice; Informality; Urbanisation; Institutional work; Energy transition |
| JEL: | O17 O18 Q48 |
| Date: | 2026–09–25 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:lucirc:2025_010 |
| By: | ghazanfar, rabail |
| Abstract: | Informal waste pickers (rag-pickers) are among the most marginalised urban groups in Pakistan, yet they are often linked in public debate to petty crime, substance use and sex work. This study surveys 300 frontline stakeholders (78 police personnel, 175 NGO staff and 47 other residents) in Rawalpindi and Islamabad to examine which offences they attribute to waste pickers and how these perceptions relate to perceived social exclusion and perceived support from government and NGOs. Substance use (80%) and prostitution (79%) were the offences most often attributed; murder rarely (5%). Perceived social exclusion was strongly associated with perceived criminal involvement (r = .73, p < .001), while perceived institutional support showed a weak negative association (r = -.17, p = .004). In a regression model (R2 = .53), exclusion was the only significant predictor (beta = .75); the association of support with criminal involvement operated indirectly through lower exclusion (indirect effect = -.23, Sobel z = -5.27, p < .001). The findings suggest that support reduces perceived criminality only insofar as it reduces exclusion, and argue for inclusion-oriented policy: integrating waste pickers into municipal waste systems, making social protection reachable, and protective rather than extractive policing. Based on the author's MPhil thesis (National Defence University, Islamabad, 2020). |
| Date: | 2026–09–30 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:3y49g_v1 |