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on Informal and Underground Economics |
| By: | Jones, Sam (UNU-WIDER); Sen, Kunal (University of Manchester) |
| Abstract: | Can digital labour market platforms reduce search frictions in formal or informal labour markets? We study this question using a randomized experiment embedded in a tracer study of the work transitions of graduates from technical and vocational colleges in Mozambique. We implement an encouragement design, inviting graduates by SMS to join established digital platforms: Biscate, a site to find freelancers for informal manual tasks; and Emprego, a conventional formal jobs website. In contrast to positive estimates of the contribution of both platforms to job outcomes from naïve (per-treatment) estimates, both intent-to-treat and complier average treatment effects are consistently zero in the full sample, while the impact on life satisfaction is negative. However, use of the informal jobs platform leads to better work outcomes for women, especially those with manual qualifications, for whom earnings rise by over 50%. |
| Keywords: | digital labour platforms, search frictions, technical and vocational education, unemployment, Mozambique |
| JEL: | J64 J68 O15 |
| Date: | 2022–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15409&r= |
| By: | Liu, Li (International Monetary Fund); Lockwood, Ben (University of Warwick); Tam. Eddy (King's College london) |
| Abstract: | This paper studies the effect of the VAT threshold on firm growth in the UK, using exogenous variation over time in the threshold, combined with turnover bin fixed effects, for identification. We find robust evidence that annual growth in turnover slows by about 1 percentage point when firm turnover gets close to the threshold, and weaker evidence of higher growth when the threshold is passed. Growth in firm costs shows a similar pattern, indicating that the response to the threshold is likely to be a real response rather than an evasion response. Firms that habitually register even when their turnover is below the VAT threshold (voluntary registered firms) have growth that is unaffected by the threshold, whereas firms that select into the Flat-Rate Scheme have a less pronounced slowdown response than other firms. Similar patterns of turnover and cost growth around the threshold are also observed for non-incorporated businesses. Finally, simulation results clarify the relative contribution of "noncrossers" ( firms who eventually register for VAT) and "non-crossers" (those who permanently stay below the threshold) in explaining our empirical findings. JEL Classification: H22 ; H25 ; H26 |
| Keywords: | VAT ; size-based threshold ; firm growth |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:wrk:warwec:1418&r= |
| By: | Gasmi, Farid; Aurazo, Jose |
| Abstract: | Considered as a cornerstone of development, financial inclusion has become a universal goal, in particular for developing countries that happen to be characterized by a high degree of labor informality. Our aim in this paper is twofold. First, we study how labor informality affects financial inclusion in a static framework. Second, we argue that financial inclusion must be treated as a dynamic process and investigate the effect of movements between formal and informal jobs on the probabilities of entry to and exit from the financial system. We find evidence that financial inclusion is an auto-regressive process and that labor informality reduces the probability of entry to the financial system by 8% whereas it increases the probability of exit from it by 9.3%. As to transitions in the labor market, we find that, relative to workers who get stuck in informal jobs, for those who have and stay with formal jobs, the probability that they enter the financial system is higher by 9% and the probability that they exit from it is lower by 12%. As to the workers who move into labor formality, we find that they are more likely to enter the financial system by 9.7% and less likely to exit from it by 7.1%. Our results add to the many well documented spillover effects of labor formality in developing countries to encourage policies that promote it. |
| Keywords: | Financial inclusion; labor informality; transition probabilities; dynamic randomeffect panel probit |
| JEL: | C23 D14 E26 I31 O17 |
| Date: | 2022–07–28 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:127217&r= |
| By: | Granda-Carvajal, Catalina; Hamann, Franz; Tamayo, Cesar E. |
| Abstract: | In this paper we build an incomplete-markets model with heterogeneous households and firms to study the aggregate effects of saving constraints and credit constraints in general equilibrium. We calibrate the model using survey data from Colombia, a developing country in which informal saving and credit frictions are pervasive. Our quantitative results suggest that reducing savings costs increases selection into formal saving, but the effect on aggregate outcomes and welfare is dwarfed by that of a policy which ameliorates borrowing constraints. Such a policy improves resource allocation and increases returns to capital and labor, resulting in higher savings and welfare gains for both households and firms. |
| Keywords: | saving constraints; credit constraints; financial inclusion; misallocation; savings; formal and informal financial markets |
| JEL: | E21 E44 G21 O11 O16 |
| Date: | 2022–08 |
| URL: | http://d.repec.org/n?u=RePEc:rie:riecdt:92&r= |