Pub Date : 2021-05-28DOI: 10.1080/23322039.2021.1932246
S. Esaku
This paper investigates whether corruption has contributed to the rise of the shadow economy in Uganda. Using autoregressive distributed lag bounds testing approach and granger causality econometri...
{"title":"Does Corruption Contribute to the Rise of the Shadow Economy? Empirical Evidence from Uganda","authors":"S. Esaku","doi":"10.1080/23322039.2021.1932246","DOIUrl":"https://doi.org/10.1080/23322039.2021.1932246","url":null,"abstract":"This paper investigates whether corruption has contributed to the rise of the shadow economy in Uganda. Using autoregressive distributed lag bounds testing approach and granger causality econometri...","PeriodicalId":378044,"journal":{"name":"ERN: Informal Sectors & the Underground Economy in Transitional Economies (Topic)","volume":"100 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-05-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122695868","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2020-05-19DOI: 10.3126/qjmss.v2i1.29028
B. Sharma, Dipak Bahadur Adhikari, PhD
Background: The informal economy is an important phenomenon in developing countries. In recent years there has been an increasing policy interest in the informal economy and its poverty dynamics.
Objective: This paper explores the relationship between the informal economy and poverty through literature review of internet based open access resources published from 2000 to 2019.
Method: Many empirical studies in our review have shown that informal employment has a causal impact on household poverty. This paper seeks to evaluate how informal economy through the theoretical lens applied to real world problems and explore the potential value of empirical evidences in progressing new understandings of the linkage between informal economy and poverty.
Findings: Informal economy is the main source of livelihood for marginalized and poor and earnings from this sector have had a strong impact on the household livelihood. It is important that policymakers recognize the informal economy as a positive contribution to poverty, especially in countries where formal economic activities are less in operation.
Conclusions: This study identifies the role of informal economy in poverty dynamics and important policy debates which provide directions to improve the quality and consistency for future research.
{"title":"Informal Economy and Poverty Dynamics: A Review","authors":"B. Sharma, Dipak Bahadur Adhikari, PhD","doi":"10.3126/qjmss.v2i1.29028","DOIUrl":"https://doi.org/10.3126/qjmss.v2i1.29028","url":null,"abstract":"Background: The informal economy is an important phenomenon in developing countries. In recent years there has been an increasing policy interest in the informal economy and its poverty dynamics.<br><br>Objective: This paper explores the relationship between the informal economy and poverty through literature review of internet based open access resources published from 2000 to 2019.<br><br>Method: Many empirical studies in our review have shown that informal employment has a causal impact on household poverty. This paper seeks to evaluate how informal economy through the theoretical lens applied to real world problems and explore the potential value of empirical evidences in progressing new understandings of the linkage between informal economy and poverty.<br><br>Findings: Informal economy is the main source of livelihood for marginalized and poor and earnings from this sector have had a strong impact on the household livelihood. It is important that policymakers recognize the informal economy as a positive contribution to poverty, especially in countries where formal economic activities are less in operation.<br><br>Conclusions: This study identifies the role of informal economy in poverty dynamics and important policy debates which provide directions to improve the quality and consistency for future research.","PeriodicalId":378044,"journal":{"name":"ERN: Informal Sectors & the Underground Economy in Transitional Economies (Topic)","volume":"285 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-05-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114392032","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The scientific report presents the results of a sociological study carried out by the research center for socio-political monitoring of the School of public policy and management of the Institute of social Sciences of the RANEPA in 2019. The results of the study provide an assessment of the scale of Russian self-employment, including in the informal economy, and an analysis of the features of its functioning, including an analysis of the needs, interests, social assessments, value orientations, attitudes and behavior of the self-employed, which are in causal relationship with their economic and social situation. The results of the study are presented in comparison with the results of sociological surveys conducted by the Center in previous years using a comparable methodology. The main findings of the sociological study formed the basis of recommendations that allow public authorities to create favorable conditions for the development of self-employed in the official sector of the economy.
{"title":"Особенности Деятельности Самозанятых Граждан На Современном Рынке Труда (Features of the Activities of Self-Employed Citizens in the Modern Labor Market)","authors":"A. Pokida, N. Zybunovskaya","doi":"10.2139/ssrn.3692278","DOIUrl":"https://doi.org/10.2139/ssrn.3692278","url":null,"abstract":"The scientific report presents the results of a sociological study carried out by the research center for socio-political monitoring of the School of public policy and management of the Institute of social Sciences of the RANEPA in 2019. The results of the study provide an assessment of the scale of Russian self-employment, including in the informal economy, and an analysis of the features of its functioning, including an analysis of the needs, interests, social assessments, value orientations, attitudes and behavior of the self-employed, which are in causal relationship with their economic and social situation. The results of the study are presented in comparison with the results of sociological surveys conducted by the Center in previous years using a comparable methodology. The main findings of the sociological study formed the basis of recommendations that allow public authorities to create favorable conditions for the development of self-employed in the official sector of the economy.","PeriodicalId":378044,"journal":{"name":"ERN: Informal Sectors & the Underground Economy in Transitional Economies (Topic)","volume":"364 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"134332183","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper investigates how the ability to innovate affects firms' decisions to operate informally and the aggregate consequences of their sectoral choice. I embed a sectoral choice model, where firms choose to operate in the formal or informal economy, into a richer general equilibrium environment to analyze the aggregate effects of firm-level decisions in response to government taxation. I calibrate the model and conduct simulations to quantify the impacts on the aggregate economy. I find that a change in tax rates from 50% to 60% leads to a 20.9% reduction in the size of the formal sector. This change is accompanied by a 0.07 percentage point reduction in TFP growth per year. Given that countries like Mali, Mexico, and Sri Lanka impose total tax rates near 50%, these findings have significant and applicable policy implications across a broad range of lesser developed countries. Even at lower tax rates, for instance 10%, a 10% increase, decreases the size of the formal sector by more than 7.7%.
{"title":"Informality, Innovation, and Aggregate Productivity Growth","authors":"Tyler C. Schipper","doi":"10.1111/rode.12626","DOIUrl":"https://doi.org/10.1111/rode.12626","url":null,"abstract":"This paper investigates how the ability to innovate affects firms' decisions to operate informally and the aggregate consequences of their sectoral choice. I embed a sectoral choice model, where firms choose to operate in the formal or informal economy, into a richer general equilibrium environment to analyze the aggregate effects of firm-level decisions in response to government taxation. I calibrate the model and conduct simulations to quantify the impacts on the aggregate economy. I find that a change in tax rates from 50% to 60% leads to a 20.9% reduction in the size of the formal sector. This change is accompanied by a 0.07 percentage point reduction in TFP growth per year. Given that countries like Mali, Mexico, and Sri Lanka impose total tax rates near 50%, these findings have significant and applicable policy implications across a broad range of lesser developed countries. Even at lower tax rates, for instance 10%, a 10% increase, decreases the size of the formal sector by more than 7.7%.","PeriodicalId":378044,"journal":{"name":"ERN: Informal Sectors & the Underground Economy in Transitional Economies (Topic)","volume":"12 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-11-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130300172","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The rising number of foreign workers in Italy during the last fifteen years has led to a conspicuous increase in the amount of remittances sent abroad. In this paper we examine the determinants of remittance outflows originated in Italy and transferred abroad through registered financial intermediaries. After controlling for a wide set of socio-economic regressors, we document a strong positive relation between remittances and the cost of travel between Italy and the migrants’ respective home countries. We interpret this result as indirect evidence of unrecorded flows, since the relation between remittances and travel cost should be non-significant unless geographical proximity permits remitters to switch to informal (nonobservable) transmission mechanisms. Moreover, using data on temporal and monetary costs for a subset of bilateral corridors, we also find remittances to be negatively correlated with high transaction costs and low speed of transfer. We rely on this empirical evidence and on a model of migrants’ remitting behavior to present new strategies for estimating the size of the informal outflow.
{"title":"More Distance, More Remittance? Remitting Behaviour, Travel Costs and the Size of the Informal Channel","authors":"Fabrizio Ferriani, G. Oddo","doi":"10.2139/ssrn.3116750","DOIUrl":"https://doi.org/10.2139/ssrn.3116750","url":null,"abstract":"The rising number of foreign workers in Italy during the last fifteen years has led to a conspicuous increase in the amount of remittances sent abroad. In this paper we examine the determinants of remittance outflows originated in Italy and transferred abroad through registered financial intermediaries. After controlling for a wide set of socio-economic regressors, we document a strong positive relation between remittances and the cost of travel between Italy and the migrants’ respective home countries. We interpret this result as indirect evidence of unrecorded flows, since the relation between remittances and travel cost should be non-significant unless geographical proximity permits remitters to switch to informal (nonobservable) transmission mechanisms. Moreover, using data on temporal and monetary costs for a subset of bilateral corridors, we also find remittances to be negatively correlated with high transaction costs and low speed of transfer. We rely on this empirical evidence and on a model of migrants’ remitting behavior to present new strategies for estimating the size of the informal outflow.","PeriodicalId":378044,"journal":{"name":"ERN: Informal Sectors & the Underground Economy in Transitional Economies (Topic)","volume":"8 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-09-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"117001984","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This report presents estimates of the size of the shadow economy in Moldova and Romania during the years 2015-2016. The estimates are based on surveys of entrepreneurs in both countries, following the method of Putniņš and Sauka (2015). The components of the shadow economy captured by this approach include misreported business income, unregistered or hidden employees, and ‘envelope’ wages. Our estimates indicate that the size of the shadow economy in Moldova and Romania was approximately 29.7% and 33.3% of GDP in 2016, respectively. In both countries the estimated size of the shadow economy decreased in 2016 compared to 2015: in Moldova only slightly (0.1%) and in Romania by 2.3%. The contraction is mainly driven by a small decrease in underreporting of business income, which is the largest component of the shadow economy in both economies.
{"title":"Shadow Economy Index for Moldova and Romania 2015-2016","authors":"Tālis J. Putniņš, A. Sauka, A. Davidescu","doi":"10.2139/ssrn.3171741","DOIUrl":"https://doi.org/10.2139/ssrn.3171741","url":null,"abstract":"This report presents estimates of the size of the shadow economy in Moldova and Romania during the years 2015-2016. The estimates are based on surveys of entrepreneurs in both countries, following the method of Putniņš and Sauka (2015). The components of the shadow economy captured by this approach include misreported business income, unregistered or hidden employees, and ‘envelope’ wages. Our estimates indicate that the size of the shadow economy in Moldova and Romania was approximately 29.7% and 33.3% of GDP in 2016, respectively. In both countries the estimated size of the shadow economy decreased in 2016 compared to 2015: in Moldova only slightly (0.1%) and in Romania by 2.3%. The contraction is mainly driven by a small decrease in underreporting of business income, which is the largest component of the shadow economy in both economies.","PeriodicalId":378044,"journal":{"name":"ERN: Informal Sectors & the Underground Economy in Transitional Economies (Topic)","volume":"399 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116332059","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Empirical evidence suggests that use of child labor as domestic help has increased significantly in recent years although the overall incidence of child labor across the globe has declined satisfactorily. This should draw the attention of economists and policymakers because domestic child labor is considered as exploitative and in many cases hazardous. This paper purports to explain this apparently perplexing finding theoretically in terms of a three-sector general equilibrium model with a nontraded sector where only child labor is used to render services to the richer section of the society. The analysis shows how FDI-led economic growth increases the size of the services sector although it lowers the overall incidence of child labor in the economy and improves the welfare of the poor families that supply child labor. Finally, a composite policy has been recommended that can deal with all three aspects favorably.
{"title":"Foreign Direct Investment and Domestic Child Labor","authors":"Sarbajit Chaudhuri, J. K. Dwibedi","doi":"10.1111/rode.12263","DOIUrl":"https://doi.org/10.1111/rode.12263","url":null,"abstract":"Empirical evidence suggests that use of child labor as domestic help has increased significantly in recent years although the overall incidence of child labor across the globe has declined satisfactorily. This should draw the attention of economists and policymakers because domestic child labor is considered as exploitative and in many cases hazardous. This paper purports to explain this apparently perplexing finding theoretically in terms of a three-sector general equilibrium model with a nontraded sector where only child labor is used to render services to the richer section of the society. The analysis shows how FDI-led economic growth increases the size of the services sector although it lowers the overall incidence of child labor in the economy and improves the welfare of the poor families that supply child labor. Finally, a composite policy has been recommended that can deal with all three aspects favorably.","PeriodicalId":378044,"journal":{"name":"ERN: Informal Sectors & the Underground Economy in Transitional Economies (Topic)","volume":"12 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127268313","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Using the responses in the latest round of the Business Environment and Enterprise Performance Survey (BEEPS) of approximately 1,800 business owners and senior managers in the Western Balkans, this paper examines the linkages between firm performance and perceived obstacles to doing business. We find that unfair competition from the informal sector is the main concern, although other obstacles also adversely affect firm performance. The paper highlights the need to tackle more rigorously all sorts of informality, not only in the context of unfair competition, but also for the sustainability of public finances.
{"title":"Firm Performance and Obstacles to Doing Business in the Western Balkans: Evidence from the BEEPS","authors":"A. Krešić, Jakov Milatović, Peter Sanfey","doi":"10.2139/ssrn.3119154","DOIUrl":"https://doi.org/10.2139/ssrn.3119154","url":null,"abstract":"Using the responses in the latest round of the Business Environment and Enterprise Performance Survey (BEEPS) of approximately 1,800 business owners and senior managers in the Western Balkans, this paper examines the linkages between firm performance and perceived obstacles to doing business. We find that unfair competition from the informal sector is the main concern, although other obstacles also adversely affect firm performance. The paper highlights the need to tackle more rigorously all sorts of informality, not only in the context of unfair competition, but also for the sustainability of public finances.","PeriodicalId":378044,"journal":{"name":"ERN: Informal Sectors & the Underground Economy in Transitional Economies (Topic)","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-01-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129639536","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Relying on the present literature, official statistics, and household survey data in the People’s Republic of China (PRC), this paper summarizes research findings on the relationship between urbanization, urban–rural inequality, and poverty, and provides further empirical evidence on the role of urbanization and government policies in urban poverty. Several conclusions can be drawn from this paper. First, urbanization has a significant effect on reducing both poverty of rural residents and poverty of migrating peasants, and, consequently, has a positive effect on narrowing the rural–urban income/consumption gap. Urban labor markets play an important role in this effect. Second, urbanization is positively correlated to urban poverty. This can be explained by the competition between migrating peasants and urban workers in the labor market, and the failure of the government’s anti-poverty policies in urban areas. Third, the existence of an informal sector has a negative effect on the poverty of urban citizens. Being employed by the informal sector significantly increases the probability of falling into poverty for urban citizens. Fourth, the minimum wage has a positive effect on reducing urban poverty, while the effect of other policies, such as Di Bao and Minimum Living Standard, is limited.
{"title":"Urbanization, Inequality, and Poverty in the People's Republic of China","authors":"Y. Zhang","doi":"10.2139/ssrn.2838056","DOIUrl":"https://doi.org/10.2139/ssrn.2838056","url":null,"abstract":"Relying on the present literature, official statistics, and household survey data in the People’s Republic of China (PRC), this paper summarizes research findings on the relationship between urbanization, urban–rural inequality, and poverty, and provides further empirical evidence on the role of urbanization and government policies in urban poverty. Several conclusions can be drawn from this paper. First, urbanization has a significant effect on reducing both poverty of rural residents and poverty of migrating peasants, and, consequently, has a positive effect on narrowing the rural–urban income/consumption gap. Urban labor markets play an important role in this effect. Second, urbanization is positively correlated to urban poverty. This can be explained by the competition between migrating peasants and urban workers in the labor market, and the failure of the government’s anti-poverty policies in urban areas. Third, the existence of an informal sector has a negative effect on the poverty of urban citizens. Being employed by the informal sector significantly increases the probability of falling into poverty for urban citizens. Fourth, the minimum wage has a positive effect on reducing urban poverty, while the effect of other policies, such as Di Bao and Minimum Living Standard, is limited.","PeriodicalId":378044,"journal":{"name":"ERN: Informal Sectors & the Underground Economy in Transitional Economies (Topic)","volume":"4 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-07-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114964621","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2015-12-30DOI: 10.18836/2178-0587/EALR.V6N2P304-321
P. Ávila
Normal 0 21 false false false MicrosoftInternetExplorer4 The Brazilian federal legislation on land subdivision approved in 1979 and its local implementation by municipalities contributed to increase housing informality from 1980 to 2000, a period of marked changes in the economic, demographic, and social scenarios. Econometric analysis of a cross-sectional and time-series panel of censuses data regarding insecure housing tenure suggests that regulations on land subdivision played an important role in the growth of housing informality in Brazil, regardless demographic and economic factors. This was most noticeable when local ordinances overregulated land subdivision parameters. We argue that stricter and more demanding requirements for approval and registration of land developments increased costs and risks for subdividing land formally within a scenario of economic downturn. This constrained formal land supply elasticity for the low-income housing demand which probably forced developers into informality to eliminate the costs and red tape involved in developing land formally.
{"title":"Land Subdivision Legislation in Brazil — Guilty of Promoting Insecure Housing Tenure?","authors":"P. Ávila","doi":"10.18836/2178-0587/EALR.V6N2P304-321","DOIUrl":"https://doi.org/10.18836/2178-0587/EALR.V6N2P304-321","url":null,"abstract":"Normal 0 21 false false false MicrosoftInternetExplorer4 The Brazilian federal legislation on land subdivision approved in 1979 and its local implementation by municipalities contributed to increase housing informality from 1980 to 2000, a period of marked changes in the economic, demographic, and social scenarios. Econometric analysis of a cross-sectional and time-series panel of censuses data regarding insecure housing tenure suggests that regulations on land subdivision played an important role in the growth of housing informality in Brazil, regardless demographic and economic factors. This was most noticeable when local ordinances overregulated land subdivision parameters. We argue that stricter and more demanding requirements for approval and registration of land developments increased costs and risks for subdividing land formally within a scenario of economic downturn. This constrained formal land supply elasticity for the low-income housing demand which probably forced developers into informality to eliminate the costs and red tape involved in developing land formally.","PeriodicalId":378044,"journal":{"name":"ERN: Informal Sectors & the Underground Economy in Transitional Economies (Topic)","volume":"10 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2015-12-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132061921","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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