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on All new papers |
| By: | Lucio Castro; Carlos Scartascini |
| Abstract: | Tax evasion is a pervasive problem in many countries. In particular, some developing countries do not collect even half of what they would if taxpayers complied with the written letter of the law. The academic literature has not been oblivious to the need to explain why people pay (or do not pay) taxes. However, the empirical literature has not yet reached consensus. This paper reports the results of a large field experiment that tried to affect compliance by influencing property tax taxpayers’ beliefs regarding the levels of enforcement, equity, and fairness of the tax system in a municipality in Argentina. Results indicate that the most effective message was one that stated the actual fines and potential legal consequences taxpayers may face in the case of noncompliance (tax compliance increased by more than 4 percentage points). No average effects are found for the treatments designed to affect beliefs about the equity and fairness of the system. However, the evidence also points out that not every taxpayer updates his or her beliefs in the same direction, as relevant heterogeneous effects are found across the population. The evidence in this paper advances the state of knowledge and may help to reconcile some of the different results in the literature. |
| JEL: | C93 D03 H26 H41 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:idb:wpaper:idb-wp-472&r=iue |
| By: | Amit Basole (Department of Economics, University of Massachusetts, Boston); Deepankar Basu (Department of Economics, University of Massachusetts, Amherst); Rajesh Bhattacharya (Indian Institute of Management, Calcutta) |
| Abstract: | There are two divergent perspectives on the impact of subcontracting on firms in the informal sector. According to the benign view, formal sector firms prefer linkages with relatively modern firms in the informal sector, and subcontracting enables capital accumulation and technological improvement in the latter. According to the exploitation view, formal sector firms extract surplus from stagnant, asset-poor informal sector firms that use cheap family labour in home-based production. However, direct, firm-level evidence on the determinants and impact of subcontracting is thus far lacking in the literature. We apply a modified Heckman selection model to Indian National Sample Survey data on informal manufacturing enterprises (2005-06). We find that home-based, relatively asset-poor, and female-owned firms are more likely to be in a subcontracting relationship. Further, we perform selectivity-corrected Oaxaca-Blinder Decomposition and calculate treatment effects to show that subcontracting benefits smaller firms, firms in industrially backward states and rural firms; it is harmful for larger firms, firms in industrially advanced states, and urban firms. Our results suggest that the effects of subcontracting are more complex than those predicted by the divergent perspectives. Policy-makers need to engage with this complexity. |
| Keywords: | sub-contracting, informal sector, Heckman sample selection, Blinder-Oaxaca de- composition |
| JEL: | C31 O17 O53 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:ums:papers:2014-04&r=iue |
| By: | Pablo D`Erasmo |
| Abstract: | This paper studies the link between credit conditions and formalization in Brazil, as both credit and the rate of formalization have notably increased in the last decade. A firm dynamics model with endogenous formal and informal sectors is developed to quantitatively evaluate how much of the change in corporate credit and the size of the formal sector can be attributed to a reduction in the cost of financial intermediation. The model predicts that the observed reduction in intermediation costs generates an increase in the credit-to-output ratio and in the share of formal workers, in line with the data. It is found that -by affecting the corporate interest rate, the allocation of capital and the entry and exit rates- the change in credit conditions has important effects on firm size distribution and aggregate productivity. |
| JEL: | D24 E26 L11 O16 O17 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:idb:wpaper:idb-wp-404&r=iue |