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on Informal and Underground Economics |
| By: | Giuseppina Gianfreda (Università della Tuscia); Giovanna Vallanti (Luiss "Guido Carli") |
| Abstract: | Compliance with labour law has costs and benefits which may depend on the institutional environment in which firms operate. Although several studies have documented a negative effect of informality on firms' productivity and growth, it is a fact that firms may resort to undeclared employment to escape excessive tax or regulatory burden. We argue that firms may respond to strict employment protection legislation through accrued informality thus (partially) offsetting the negative effect of informality on productivity. We exploit the Italian dismissal legislation imposing higher firing costs for firms with more than 15 workers and show that informality reduces the turnover of formal jobs for firms above the 15 workers threshold; furthermore, while the overall effect of informality on firms' productivity is negative, the differential effect for firms above the threshold as compared to smaller firms is positive and significant. |
| Keywords: | tax evasion, EPL, productivity, firm size, RD estimation. |
| JEL: | D02 D22 D24 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:lui:lleewp:17135&r=iue |
| By: | H. Lehmann; N. Pignatti |
| Abstract: | One of the most important factors that determine individuals’ quality of life and wellbeing is their position in the labor market and the type of jobs that they hold. When workers are rationed out of the formal segment of the labor market against their will, i.e., the labor market is segmented, their quality of life is limited, and their wellbeing is reduced. When they can freely choose between a formal or informal employment relationship, i.e., the labor market is integrated, their wellbeing can reach high levels even in the presence of informal employment. We, therefore, test whether the Ukrainian labor market is segmented along the formal-informal divide, slicing the data by gender and age. The analysis that we perform consist in the analysis of short-term and medium-term transitions between five employment states, unemployment and inactivity. We also analyze wage gaps of mean hourly earnings and across the entire hourly earnings distribution, controlling for time-invariant unobserved heterogeneity. According to our results segmentation is present for dependent employees: for a large part of informal employees informal employment is used as a waiting stage to enter formal salaried employment and is not voluntarily chosen. As far as self-employment is concerned the evidence is mixed regarding in the Ukrainian labor market. This heterogeneity in outcomes implies that not all informal work is associated with a low quality of life and reduced wellbeing in post-transition economies. |
| JEL: | J31 J40 P23 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:bol:bodewp:wp1117&r=iue |
| By: | Prodyumna Goutam; Italo A. Gutierrez; Krishna B. Kumar; Shanthi Nataraj |
| Abstract: | Informal employment accounts for the majority of employment in many developing countries, yet its relevance to growth, and its links with the formal sector, remain poorly understood. A widely held view is that informality eventually gives way to formality as countries develop. In this paper, we examine the effects of growth opportunities — in the form of export-induced demand in Bangladesh — on four types of employment: formal, casual, unpaid, and self-employment. At an aggregate level, export-induced demand increases the levels of all four types of employment. We also conduct a district-level analysis, constructing a shift-share measure of trade exposure that relies on national, industry-level variation in exports, coupled with pre-existing, district-level shares of employment by industry. We find that the direct impact of trade is to increase labor force participation and formal employment. When we also include the indirect impacts of trade, in the form of induced demand through supply chain linkages, we find an even larger impact on labor force participation. The results also suggest that trade triggers an immediate increase in both formal and casual employment, as well as a longer-run increase in self-employment. We conclude that labor response to growth opportunities such as trade is not limited to formal employment, and a more nuanced understanding of informality in the growth process is needed. |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:ran:wpaper:1198&r=iue |
| By: | Italo A. Gutierrez; Krishna B. Kumar; Minhaj Mahmud; Farzana Munshi; Shanthi Nataraj |
| Abstract: | We document transitions between different types of formal and informal employment using retrospective job histories from a new survey of 2,000 workers in two metropolitan areas of Bangladesh. We find that workers transitioning between jobs are most likely to remain in the same type of employment, but that there is substantial churn across employment types. Private wage employees are most likely to transition to a new job, and the observed changes in earnings and job benefits provide evidence of upward mobility. Nevertheless, we also find a non-trivial risk of downward mobility, especially for those transitioning into casual employment, which has the lowest level of earnings and benefits and the highest levels of exposure to workplace hazards and violence. Our results also suggest that self-employment is not always an activity of last resort. 30% of workers who leave private employment move to self-employment; among these workers, many quit voluntarily, and most report that they prefer it to wage employment. Overall, our findings suggest that there are elements of informal employment consistent with both the traditional view that it is a segmented portion of the labor market with few prospects of upward mobility, and the alternative view that it is a dynamic, entrepreneurial alternative to wage employment. |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:ran:wpaper:1199&r=iue |
| By: | Ali Souag (ERUDITE - Equipe de Recherche sur l’Utilisation des Données Individuelles en lien avec la Théorie Economique - UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12 - UPEM - Université Paris-Est Marne-la-Vallée); Philippe Adair (ERUDITE - Equipe de Recherche sur l’Utilisation des Données Individuelles en lien avec la Théorie Economique - UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12 - UPEM - Université Paris-Est Marne-la-Vallée); Nacer Eddine Hammouda |
| Date: | 2016–12 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-01667438&r=iue |
| By: | Minhaj Mahmud; Italo A. Gutierrez; Krishna B. Kumar; Shanthi Nataraj |
| Abstract: | In this study, we use a choice experiment to elicit workers' willingness to pay (WTP) for specific job benefits typically associated with formal employment (contracts, termination notice, paid leave, preferred working hours, and access to a retirement account). We find that workers most value job stability: the average worker would be willing to give up 19 percent of monthly income for a 6-month contract, 27 percent for a 1-year contract and 44 percent for a permanent contract (relative to no contract). Thirty days' of termination notice would also be valued at about 12 percent of monthly income. Using a latent class model, we explore preference heterogeneity and find that government workers are more likely to place a higher value on long-term contracts than private sector employees, while casual workers are more likely to have a particularly strong preference for higher salary, and a relatively low WTP for various benefits. This heterogeneity may be driven by sorting or loss aversion. Our work also lends support to the use of choice experiments to overcome the challenges associated with estimating WTP for specific job benefits from hedonic wage regressions or from observed job durations. |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:ran:wpaper:1197&r=iue |
| By: | Joel Cariolle (CERDI - Centre d'Études et de Recherches sur le Développement International - UdA - Université d'Auvergne - Clermont-Ferrand I - CNRS - Centre National de la Recherche Scientifique, FERDI - Fondation pour les Etudes et Recherches sur le Développement International); Cyril Chalendard (CERDI - Centre d'Études et de Recherches sur le Développement International - UdA - Université d'Auvergne - Clermont-Ferrand I - CNRS - Centre National de la Recherche Scientifique); Anne-Marie Geourjon (CERDI - Centre d'Études et de Recherches sur le Développement International - UdA - Université d'Auvergne - Clermont-Ferrand I - CNRS - Centre National de la Recherche Scientifique, FERDI - Fondation pour les Etudes et Recherches sur le Développement International); Bertrand Laporte (CERDI - Centre d'Études et de Recherches sur le Développement International - UdA - Université d'Auvergne - Clermont-Ferrand I - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | Customs administrations in developing countries increasingly use risk-based techniques relying on data mining and statistical scoring. By demonstrating the value of using data analysis techniques to orient frontline controls so as to facilitate legal trade and combat fraud more effectively, these projects have helped promote a cultural change in these organizations. However, these risk management techniques may prove to be ineffective in assessing fraud risks based only on frauds detected by customs inspectors. In a context of moral hazard and low-performing customs administration, one way to address this weakness is to expand the approach by relying on other sources of information such as discrepancies in bilateral trade statistics. Several studies use these statistical discrepancies (mirror data) to identify fraudulent declarations and estimate their effects. By comparing Gabon's import customs data with discrepancies in its bilateral trade data, this paper stresses the usefulness of simultaneously analyzing customs fraud records and mirror trade statistics data. Such an analysis helps quantifying undetected fraud and therefore constitutes a valuable tool to target ex post audits. Then, based on the combination of these databases, the paper defines indicators to monitor the performance of customs controls. |
| Keywords: | Customs risk analysis, Performance of customs authorities, Customs fraud, Tax evasion, Administrative data, Mirror analysis. |
| Date: | 2018–01–08 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01677266&r=iue |
| By: | Ali Souag (ERUDITE - Equipe de Recherche sur l’Utilisation des Données Individuelles en lien avec la Théorie Economique - UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12 - UPEM - Université Paris-Est Marne-la-Vallée); Philippe Adair (ERUDITE - Equipe de Recherche sur l’Utilisation des Données Individuelles en lien avec la Théorie Economique - UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12 - UPEM - Université Paris-Est Marne-la-Vallée); Nacer Eddine Hammouda |
| Abstract: | We identify the main characteristics of informal jobs and their evolution between 2001 and 2010 from national employment surveys on cross-section over 2001-2010 conducted by the ONS in Algeria. We mobilize a descriptive analysis and econometric analysis of the probability of being in informal employment. It shows that this period of informal employment in Algeria seems to have a traditional function of "anti-crisis" strategy. It mainly affects young people, women, less educated, those who operate in the informal sector or in the construction sector, and those who are not permanent employees, self-employed or unpaid family workers. Keywords: Algeria, informal employment, logit model. |
| Abstract: | Nous identifions les principales caractéristiques des emplois informels et leur évolution entre 2001 et 2010 à partir des enquêtes nationales sur l’emploi en coupe transversale réalisées par l’ONS en Algérie. Nous mobilisons une analyse descriptive puis une analyse économétrique de la probabilité d’occuper un emploi informel, à travers lesquelles il est avéré que durant cette période l’emploi informel en Algérie semble avoir une fonction traditionnelle de stratégie «anti-crise». Il touche principalement les jeunes, les femmes, les moins éduqués, ceux qui exercent leur activité dans le secteur d’activité de la construction, et ceux qui sont salariés non permanent, travailleurs indépendants ou travailleur familiaux non rémunérés. Mots clé : Algérie, emploi informel, modèle logit. JEL: J21, C25 |
| Date: | 2016–06 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-01667432&r=iue |