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on Informal and Underground Economics |
| By: | Njoya, Loudi; Ngouhouo, Ibrahim; Asongu, Simplice; Schneider, Friedrich |
| Abstract: | This paper is interested in explaining the causes of the simultaneous evolution between economic growth and informality. Using a large annual panel of African countries with a time series of 25 years, ours results show that when the corruption rate is above (below) a threshold of 1.3577, economic growth reduces (increases) informal economic sector. The corruption proxy is measured as a decreasing function of corruption such that higher levels of the corruption proxy translate lower levels of corruption. It is therefore desirable for policymakers to improve the transparency of interactions between firms, public and private agents to fight corruption, in view of decreasing the informal economic sector through economic growth. |
| Keywords: | Informal sector, Growth, Corruption, African countries |
| JEL: | D73 F47 J46 O10 O17 O47 |
| Date: | 2022–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:119059&r=iue |
| By: | Zhang, Peng; Estrin, Saul; Mickiewicz, Tomasz marek |
| Abstract: | Informal businesses, ubiquitous in developing countries, operate on the fringes of the (often ineffective) state, and are instead influenced by informal institutions. This paper applies a cultural anthropology perspective to provide explanations on the origins and dynamics of informal institutions and their effects on informal business performance. We posit that informal institutions originate from the traditions embedded in family systems, and we consider endogamy - the practice of marrying within a specific social group or local community - as a key dimension of family traditions relevant for performance of informal entrepreneurs. First, endogamy can make bridging trust more difficult to establish, limiting wider market opportunities for informal businesses in Sub-Saharan Africa and lowering their performance. Second, the evolution of informal institutions can be driven by external cultural interventions that are antipathetic to the pre-existing family systems. For example, the effect of endogamy might be attenuated by specific experiences of Africa’s colonial past, especially if the colonial powers were characterised by individualistic cultures. Our hypotheses are supported by the empirical analysis based on surveys of informal entrepreneurs in multiple regions of eight African countries. |
| JEL: | J50 |
| Date: | 2022–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:120862&r=iue |
| By: | Clément Anne; Cyril Chalendard; Ana Fernandes; Bob Rijkers; Vincent Vicard |
| Abstract: | To identify transactions at risk of tariff evasion, this paper matches export transaction data from France with import transaction data from Madagascar using container identifiers. Reporting discrepancies between exporters and importers are prevalent but small, with over two-fifths of importers reporting in a way that increases their tariff liability. Yet, aggregate tariff revenues are 24 percent lower due to discrepancies. These revenue losses are highly concentrated: the top five evaders account for three-quarters of all tariff revenue losses and larger shipments are more at risk of evasion. Tariff enforcement in Madagascar is ineffective and only marginally mitigates revenue losses. |
| Keywords: | Tax Evasion;Mirror Statistics;Trade;Corruption;Exporters;Importers;Tariffs |
| JEL: | F14 H26 |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:cii:cepidt:2023-22&r=iue |
| By: | Javier Garcia-Bernardo (1Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czechia; Department of Methodology & Statistics, Utrecht University, the Netherlands; Centre for Complex Systems Studies, Utrecht University, the Netherlands); Petr Jansky (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic) |
| Abstract: | We exploit the new country-by-country reporting data of multinational corporations, with unparalleled country coverage, to reveal the distributional consequences of profit shifting. We estimate that multinational corporations worldwide shifted over $850 billion in profits in 2017, primarily to countries with effective tax rates below 10%. Countries with lower incomes lose a larger share of their total tax revenue due to profit shifting. We further show that a logarithmic function is better suited for capturing the non-linear relationship between profits and tax rates than linear or quadratic functions. Our findings highlight effective tax rates’ importance for profit shifting and tax reforms. |
| Keywords: | multinational corporation, corporate taxation, profit shifting, effective tax rate, country-by-country reporting, global development |
| JEL: | F23 H25 H26 H32 |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:fau:wpaper:wp2023_33&r=iue |
| By: | Liliana Cuccu (AQR-IREA, University of Barcelona); Vicente Royuela (AQR-IREA, University of Barcelona); Sergio Scicchitano (John Cabot University) |
| Abstract: | This paper investigates the surge in Involuntary Part-Time (IPT) employment in Italy from 2004 to 2019, exploring its impact on various socio-economic groups and adopting a spatial perspective. Our study tests the hypothesis that technological shifts, specifically routine biased technological change (RBTC), and the expansion of household substitution services contribute to IPT growth. We uncover a widening negative gap in IPT prevalence among marginalized groups- women, young, and less skilled workers. After controlling for sector and occupation, the higher IPT propensity diminishes but remains significant, hinting at persistent discrimination. Additionally, segregation into more exposed occupations and sectors intensifies over time. Leveraging province-level indicators, and using a Partial Adjustment model, we find support for RBTC’s correlation with IPT, especially among women. The impact of household substitution services is notably pronounced for women, highlighting sector segregation and gender norms’ influence |
| Keywords: | Involuntary part-time, Precarisation of labour, Automation JEL classification: J21, J24, O33. |
| Date: | 2023–10 |
| URL: | http://d.repec.org/n?u=RePEc:aqr:wpaper:202307&r=iue |
| By: | Sanvi Avouyi-Dovi; Lorraine Chouteau; Lucas Devigne; Emmanuelle Politronacci |
| Abstract: | We build a model based on a structural dynamic approach to assess the Non-Observed Economy (NOE) over the period 1990-2019 in France. Our strategy is focused on a systematic scan of the potential causes of shadow economy. We show that the discrepancy between electricity consumption and real GDP growth rates is the main driver of the NOE. However, factors, such as drug offences and net shipments of banknotes also have significant effects on hidden activities even though their effects do not seem to be as strong. The NOE remains non-negligible in France, but its ratio, relative to the GDP, has decreased considerably in the 2000s. Finally, we observe strong links between the NOE index and the cash demand indicators. Thus, concordance tests show a noticeable synchronization between the NOE indexes (global and legal components) and the net issuance of banknotes, especially the total net issuance and the net issuance of the €50 and €200 denominations. Furthermore, the NOE indexes and GDP as well as self-employment are synchronized. We also observe positive correlations between the cyclical components of the total net issuance of banknotes and the estimated shadow economy indexes. Finally, there are some bi-directional causal relationships between the NOE indexes and the aggregate banknote demand. However, there is only a unidirectional causality between these indexes and the demand for Small denominations (€5, €10, €20). |
| Keywords: | Shadow Economy, Non-Observed Economy, Structural Equations, MIMIC Model |
| JEL: | C32 C51 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:banfra:930&r=iue |