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on Informal and Underground Economics |
| By: | James Alm (Tulane University); Michele Bernasconi (Department of Economics, Cà Foscari University Of Venice); Susan Laury (Georgia State University); Daniel J. Lee (Rice University); Sally Wallace (Georgia State University, African Tax Institute and the University of Pretoria RSA) |
| Abstract: | This paper analyzes the impact of confidentiality of taxpayer information on the level of compliance in two countries with very different levels of citizen trust in government – the United States and Italy. Using identical laboratory experiments conducted in the two countries, we analyze the impact on tax compliance of “Full Disclosure” (e.g., release of photos of tax evaders to all subjects, along with information on the extent of their noncompliance) and of “Full Confidentiality” (e.g., no public dissemination of photos or noncompliance). Our empirical analysis applies a two-stage strategy that separates the evasion decision into its extensive (e.g., “participation”) and intensive (e.g. “amount”) margins. We find strong support for the notion that public disclosure acts as an additional deterrent to tax evaders, and that the deterrent effect is concentrated in the first stage of the two-stage model (or whether to evade or not). We also find that the deterrent effect is similar in the U.S. and in Italy, despite what appear to be different social norms of compliance in the two countries. |
| Keywords: | H2, H3 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:ven:wpaper:2016:36&r=iue |
| By: | Valeria Pellegrini (Banca d'Italia); Alessandra Sanelli (Banca d'Italia); Enrico Tosti (Banca d'Italia) |
| Abstract: | The analysis of international investment position and balance of payments statistics suggests that foreign assets held abroad are greatly underestimated. This paper has three main goals. First, it examines the role played by tax havens in tax evasion. Second, it estimates unreported capital to range globally between $6 trillion and $7 trillion at end-2013, on the basis of mirror statistics on portfolio securities and on cross-border deposits of non-banks. Third, it estimates the portion of tax evasion connected to the underreporting of foreign assets to range between $20 trillion and $42 billion a year over the period 2001-2013 for capital income tax, and between $2.1 trillion and $2.8 trillion at end-2013 for personal income tax. The estimate for personal income tax is based on the assumption that the entire stock of unreported capital outstanding at end-2013 was made up of income that had escaped income tax. Finally, the paper gives a critical assessment of the strengths and weaknesses of the recent policy responses to international tax evasion. |
| Keywords: | tax evasion, tax haven, international investment, foreign investment, multinational firm, offshore, foreign assets, under-reporting |
| JEL: | H26 F21 F23 G15 |
| Date: | 2016–11 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:opques:qef_367_16&r=iue |
| By: | Tanaka, Kiyoyasu; Hashiguchi, Yoshihiro |
| Abstract: | This paper examines whether localized clusters of similar industries produce agglomeration economies in the formal and informal sectors. We develop a Bayesian method to estimate a spatial autoregressive model with an endogenous independent variable. We use establishment-level census data that cover both formal registered and informal unregistered establishments in Cambodia. We find that the density of local employment has a significantly positive effect on productivity in the informal sector, but little effect in the formal sector. For manufacturing, a doubling of employment density increases productivity in the informal sector by 9% through local linkages and by 17% through spatial multiplier linkages, leading to a 26% increase in total. A spatial network magnifies the local impact of agglomeration economies in the informal sector. |
| Keywords: | Cambodia,Industry,Informal sector,Productivity,Agglomeration economies,Bayes |
| JEL: | C11 C21 C26 H26 O17 R12 |
| Date: | 2017–05 |
| URL: | http://d.repec.org/n?u=RePEc:jet:dpaper:dpaper666&r=iue |
| By: | Daniel Baksa (Department of Economics, Central European University; Institute of Economics, Hungarian Academy of Sciences); Mihnea Constantinescu (Bank of Lithuania); Zsuzsa Munkacsi (Bank of Lithuania) |
| Abstract: | We extend OGRE, the overlapping generation model developed by Baksa and Munkacsi (2016) by adding openness. We then employ the model to explore how the macroeconomic effects of aging, assumed to manifest itself as a decrease in the mortality rate, can be counteracted through public policies. The extended version inherits the previous modelling features of OGRE allowing us to also account for the impact openness has on the effectiveness of the considered policies. |
| Keywords: | population aging, public pension reforms, pay-as-you-go, fully funded, shadow economy, informal employment, small open-economy, overlapping generations |
| JEL: | E24 E26 F41 H55 J11 J46 |
| Date: | 2016–09–23 |
| URL: | http://d.repec.org/n?u=RePEc:lie:dpaper:2&r=iue |
| By: | Marcelo Nicolas Claure Ramirez Author-Name: Alejandra Leyton Author-Name: Christian Valencia Author-Name: Karenth Vanessa Sanchez Bohrquez Author-Name: Jorge Davalos |
| Abstract: | Economic theory suggests that minimum wages may lead to unemployment; nevertheless, empirical evidence in developed economies stays ambiguous. Evidence from developing countries is even more heterogenous due to the low law enforcement and weaker labor market institutions. Thus, our aim is to assess the impact of minimum wage increases on labor market outcomes in Bolivia, a country characterized by weak law compliance and high informality. Our identification strategy exploits differences in exposure to minimum wage increases across subsets of population for the period 2006-2013. Our results show positive and significant effects over real wages for men with no effects on employment, informalization or hours worked. Furthermore, we find evidence of gender discrimination since women are prone to suffer unemployment and informalization while not benefiting from higher real wages as men do. |
| Keywords: | Minimum wage, unemployment, informal employment |
| JEL: | J3 J4 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:lvl:pmmacr:2017-10&r=iue |
| By: | Andes Chivangue; Carlos Barros |
| Abstract: | This paper analyses poverty reduction though informal trade in Mozambique, using questionnaire data and a logit model. The Mozambique economy is dominated by informal trade. Informal trade is an alternative to inexistent formal jobs and represents a strategy for escaping poverty. Results indicate that informal traders adopt this strategy as an alternative to formal jobs, and that there is an awareness that this strategy is adopted as a means of evading poverty. Other covariates enable the clarification of this relationship in the context of the theoretical background. Policy implications are derived. |
| Date: | 2017–03 |
| URL: | http://d.repec.org/n?u=RePEc:cav:cavwpp:wp151&r=iue |
| By: | Jorge Davalos; Monica Puoma Lambon-Quayefio; Samuel B. Manu |
| Abstract: | Workers effective access to mandatory non-wage benefits is key to achieving decent working conditions in the Ghanaian labor market. Thus, this paper investigates the effects of union presence on workersÕ reported access to non-wage benefits. The study draws its data from the 2012/ 2013 Ghana Living Standards Survey (GLSS VI) and specifies a Structural Equation Model (SEM) that controls for endogeneity and potential sample-selection biases. We find that unions have statistically significant facilitation effects among workers in Ghana, that is, unions appear to play an important role in improving workersÕ awareness of their work benefits. Furthermore, informal and larger firms exhibit lower facilitation effects. It is also found that despite the statutory nature of these non-wage benefits, non-compliance was present, even in the formal sector, particularly with respect to maternity leave benefits, which indicates a need for greater enforcement of these laws. |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:lvl:pmmacr:2017-08&r=iue |