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on Informal and Underground Economics |
| By: | James Alm (Tulane University); Raul A. Barreto (University of Adelaide) |
| Abstract: | Governments are always dealing with unexpected shocks, like wars, terrorism, financial crises, natural disasters, and the like. A recent prominent example is the SARS-CoV-2 pandemic. Since early 2020, governments around the world have enacted a range of unprecedented measures in an attempt to protect their citizens, with quite mixed results. This varied record has in turn had dramatic effects on peoples perceptions of their government, especially on their trust in government and so on their willingness to obey the many government mandates generated by the pandemic. This willingness to obey government mandates extends well beyond pandemic policies to all other dimensions of government laws and regulations. An important dimension of individual compliance with government mandates is tax evasion. What will be the effects of the pandemic and the associated government policies on post-pandemic tax evasion and economic growth, especially via the effects of government policies on "trust" in the government? In this paper we incorporate both tax evasion and trust in an endogenous growth model in order to examine the short and long run impacts on tax evasion of various shocks -- a pandemic shock, a government policies shock, and a tax morale shock (and the resulting impact on trust in government). We then use real data on 11 representative economies to simulate these effects, economies representing developed and developing countries as well as economies representing governments that opted for various policy responses to COVID-19, modelled as a labor productivity shock. We find that varied public policy responses to the pandemic have immediate and persistent impacts on tax evasion in the short and long run, largely via their effects on trust in government. We also find that these evasion impacts vary in important and predictable ways that depend especially on whether government dealt effectively or not with the pandemic. Our methodology is readily adapted to examine the effects of other shocks and their respective policy responses on trust in government, tax evasion, and economic growth. |
| Keywords: | COVID-19, tax evasion and tax compliance, trust, endogenous growth models |
| JEL: | H26 H30 O40 |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:tul:wpaper:2405&r=iue |
| By: | Andrew Bibler; Laura Grigolon; Keith F. Teltser; Mark J. Tremblay |
| Abstract: | Governments increasingly use changes in tax rules to combat evasion. We develop a general approach to point-identify tax compliance along with supply and demand elasticities; identification requires data on prices and quantities before and after changes in tax enforcement and a demand or supply shifter. We illustrate our approach using data on Airbnb collection agreements, where full enforcement is achieved by shifting the tax burden away from hosts to renters via the platform. We find that taxes are paid on roughly zero to 3.5 percent of Airbnb transactions prior to enforcement. |
| Keywords: | tax evasion, compliance, statutory incidence, tax invariance, Airbnb, sharing economy, voluntary collection agreements |
| JEL: | H20 H22 H26 L10 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10921&r=iue |
| By: | Saumik Paul; Dhushyanth Raju |
| Abstract: | This study examines the effects of mining productivity shocks on the formal-informal duality in manufacturing and services. Using firm census data from 2014 for Ghana, we measure the rates of informality along extensive (unregistered firms) and intensive (registered firms hiring labourers 'off the books') margins. We find that the changes in the rates of informality along both margins across sectors following mining shocks are heterogeneous. |
| Keywords: | Mining, Informality, Firm productivity, Ghana |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:wp-2024-6&r=iue |
| By: | Cedrick Kalemasi Mosengo (University of Kinshasa, the DRC); Christian Zamo Akono (University of Yaoundé 2, Cameroon) |
| Abstract: | The aim of this study is to assess the effect of informal employment on the occurrence of overeducation in developing countries, focusing on the specific case of the DRC. Using employment data, we determine the incidence of overeducation and we isolate the role of informal employment as a determinant of overeducation. To measure overeducation, we mainly use the normative (adequationist) approach. We find an incidence of overeducation in the order of 33.3% in the DRC labor market. The econometric results based on recursive bivariate Probit suggest a positive and significant effect of informal employment. The results found are robust even when using the statistical approach as an alternative measure of overeducation. These findings suggest a set of measures likely to reduce the incidence of overeducation on the labor market. These should focus on the formalization of informal sector employment and policies to improve labor market matches. |
| Keywords: | Skills mismatch, Overeducation, Undereducation, Informal employment |
| JEL: | E26 E24 I21 J24 |
| Date: | 2024–01 |
| URL: | http://d.repec.org/n?u=RePEc:agd:wpaper:24/004&r=iue |
| By: | Saavedra, Víctor (FEDESARROLLO); Reyes, Carlos Felipe (FEDESARROLLO); Velasco- Editora, Vanessa A. (FEDESARROLLO); Rodríguez (asistente), Sebastián (FEDESARROLLO); Naranjo (asistente), Julián (FEDESARROLLO) |
| Abstract: | En Colombia ha habido una consolidación de la política de vivienda que ha permitido la reducción del déficit en la zona urbana del país. Sin embargo, cuando se comparan los dos últimos censos de población en los años 2005 y 2018, se encuentra un leve aumento del déficit de vivienda. Existe por lo tanto una paradoja entre una política de vivienda consolidada institucionalmente, y un déficit persistente. Las condiciones habitacionales inadecuadas son persistentes en los contextos urbanos principalmente en las periferias surgidas a partir de dinámicas de autoconstrucción informales. Por otro lado, existe una elevada demanda de vivienda formal derivada de presiones demográficas. Demanda que, en las principales ciudades de Colombia, ha sido suplida en suelos de expansión y municipios aglomerados alejados de los distritos de empleo de estas ciudades. Este fenómeno ha contribuido a la expansión de la huella urbana, los tiempos de desplazamiento y consecuentemente a la generación de gases de efecto invernadero. A pesar de que se observa una considerable cantidad de suelo subutilizado con una alta capacidad de densificación, los promotores de vivienda desarrollan pocos proyectos de renovación urbana. Este documento identifica y sintetiza los principales retos de la política de vivienda para fortalecer y apoyar los procesos de mejoramiento de barrios informales y la renovación urbana en las ciudades principales de Colombia. |
| Keywords: | Renovación Urbana; Mejoramiento de Barrios Informal; Revitalización Urbana; Áreas Urbanas en Decadencia; Urban Renewal; Informal Neighborhood Improvement; Urban Revitalizatio Decay Urban Areas |
| JEL: | R10 R11 R14 R20 R21 R22 |
| Date: | 2024–02–19 |
| URL: | http://d.repec.org/n?u=RePEc:col:000124:021022&r=iue |