do lower taxes reduce informality evidence from brazil abstract we exploit a unique large scale formalization program in brazil to estimate the effects of reducing the costs of formality on firm formalization we rely on both firm level administrative data and individual panel data to show that reducing taxes once registration costs have already been eliminated reduces firm informality this effect comes from the formalization of existing informal firms and not from the creation of new formal businesses nor greater formal firm survival the implied formalization elasticity is otherwise low and our cost benefit analysis indicates that the program led to net losses in tax revenues

a helping hand or the long arm of the law experimental evidence on what governments can do to formalize firms many governments have spent much of the past decade trying to extend a helping hand to informal businesses by making it easier and cheaper for them to formalize much less effort has been devoted to raising the costs of remaining informal through increasing enforcement of existing regulations this paper reports on a field experiment conducted in belo horizonte brazil in order to test which government actions work in getting informal firms to register firms were randomized to a control group or one of four treatment groups the first received information about how to formalize the second received this information and free registration costs along with the use of an accountant for a year the third group was assigned to receive an enforcement visit from a municipal inspector while the fourth group was assigned to have a neighboring firm receive an enforcement visit to see if enforcement has spillovers the analysis finds zero or negative impacts of information and free cost treatments and a significant but small increase in formalization from inspections estimates of the impact of actually receiving an inspection give a 21 to 27 percentage point increase in the likelihood of formalizing the results show most informal firms will not formalize unless forced to do so suggesting formality offers little private benefit to them but the tax revenue benefits to the government of bringing firms of this size into the formal system more than offset the costs of inspections

the importance of group coverage how tax policy shaped u s health insurance in 1954 the internal revenue service stipulated that employer contributions to the health insurance plans of their employees were to be excluded from employee taxable income today the tax subsidy is major feature of the u s health care market this paper examines the initial effects of the tax subsidy on the demand for health insurance using previously unexamined data from 1953 and 1958 results suggest that the tax subsidy increased the growth of group insurance particularly among union members and employed persons this is a critical effect because group insurance is not only less expensive than individual insurance but it is also easier to obtain and households with access to group health insurance are far more likely to purchase health insurance coverage than those without similar access by increasing access to group insurance the tax subsidy fostered an increase in the purchase of group health insurance by people who may not have purchased individual coverage and generated institutional change as it cemented an employment based system of group health insurance in the united states this abstract was borrowed from another version of this item

reducing bureaucratic corruption interdisciplinary perspectives on what works abstract this article offers the first comprehensive review of the interdisciplinary state of knowledge regarding anti corruption policies with a particular focus on reducing corruption among civil servants drawing on the work of economists political scientists sociologists and anthropologists we examine seven policy categories 1 rewards and penalties 2 monitoring 3 restructuring bureaucracies 4 screening and recruiting 5 anti corruption agencies 6 educational campaigns and 7 international agreements notably rigorous empirical evaluation is lacking for the majority of commonly prescribed anti corruption policies nevertheless we find growing evidence of the effectiveness of policies based on monitoring including anti corruption audits and e governance in addition adequate civil service wages seem to be a necessary but insufficient condition for control of corruption an emerging skepticism regarding the effectiveness of anti corruption agencies also is apparent in the literature we conclude with broader lessons drawn from our review such as the recognition that when corruption is a systemic problem it cannot be treated in the long term with individual level solutions

regional sub contract suppliers to prime defence contractors evidence of their performance in response to recent changes in demand oakey r p james a and watts t 1998 regional sub contract suppliers to prime defence contractors evidence of their performance in response to recent changes in demand reg studies 32 17 29 there is considerable evidence that technological change occurs unevenly over geographical space and that change is faster in core areas of national economies than at their peripheries the principal result of this paper is a confirmation that south east firms similarly initiate diversification technology strategies more readily than their regional counterparts it is noted that defence spending is a disguised form of regional aid when contracts are awarded in peripheral parts of the united kingdom thus it is concluded that given the laggard behaviour of peripheral firms regarding diversification recent defence spending cut backs in these areas are likely to have a strong negative impact on industrial activity oakey r p james a et watts t 1998 les soutraitants regionaux aux premiers fournisseurs mi

dodging the grabbing hand the determinants of unofficial activity in 69 countries across 69 countries higher tax rates are associated with less unofficial activity as a percent of gdp but corruption is associated with more unofficial activity entrepreneurs go underground not to avoid official taxes but to reduce the burden of bureaucracy and corruption dodging the grabbing hand in this way reduces tax revenues as a percent of both official and total gdp as a result corrupt governments become small governments and only relatively uncorrupt governments can sustain high tax rates 2000 elsevier science s a all rights reserved

regulatory discretion and the unofficial economy johnson kaufmann and shleifer 1997 find that the share of the unofficial economy in gdp is determined by the extent of control rights held by politicians and bureaucrats in post communist economies exploring in more detail the role of bribes and using a broader data set from the oecd latin america and transition economies we find that the unofficial economy accounts for a larger share of gdp when there is more corruption and when the rule of law is weaker while these findings are consistent with the earlier results for transition economies in the larger country sample we find it is not necessarily the case that more regulation or higher taxes directly increases the size of the unofficial economy the problem appears to be not regulation or taxation per se but whether the state administrative system can operate without corruption a high level of regulatory discretion helps create the potential for corruption and drive firms into the unofficial economy

policy debates government output and expenditure in uk regions and sub regions an analysis of the new experimental accounts data gripaios p and bishop p 2005 government output and expenditure in uk regions and sub regions an analysis of the new experimental accounts data regional studies 39 805 813 this paper examines the regional and sub regional distribution of uk state spending by analysing new data available from recently published regional government accounts the data indicate wide variations in public spending per head across regions with london being a particular beneficiary the results do not indicate any relationship between gross domestic product per head and public spending and they suggest that in total government spending is doing little to ameliorate regional inequality if the state wishes to pursue an active regional policy it hence needs to consider the regional dimension of all state functions not simply those associated with traditional regional policy

benefits of a registration policy for microenterprise performance in india this paper evaluates the effects of a voluntary registration policy with government authorities on financial performance of urban microenterprises in the indian manufacturing sector using data from the 2006 world bank survey of indian microenterprises and applying the semi parametric propensity score matching technique we find that being registered leads to significant gains in sales per employee and value added per employee large gains are also noted for male owned firms those operating with or without paid labor and those operating outside of the owner s home

regional spending a comment on mackay mackay 2001 recently examined the regional pattern of taxation and spending in the uk concluding that for four regions london the south east scotland and northern ireland public expenditure was well above the level expected for their degree of prosperity mackay 2001 had a very approximate measure of the regional pattern of non identifiable government expenditure a major component of the latter is defence spending and a more precise allocation of this suggests that london and the south east get very preferential treatment moreover so does the south west which should be added to the list of well favoured regions this raises important issues of spatial balance and efficiency

a lottery within a lottery an examination of the distribution of lottery funds in england the uk national lottery has been in operation since 1994 an examination of the regional distribution of awards per head of population suggests marked spatial disparities with london doing particularly well and scotland northern ireland wales and the north east faring much better than other regions such disparities also exist at english local authority level with london and some major provincial centres doing much better than more rural authorities such inequalities may give grounds for concern given that they appear to replicate those for other types of government spending the results of an empirical model designed to explain the spatial distribution of awards suggest that in addition to a london effect levels of deprivation have a positive impact another important explanatory variable which has a positive impact on lottery funding is the qualifications of residents which might plausibly reflect the quality of lottery bids received from an area however once these factors are taken account of

regional taxing and spending the search for balance the financial settlement has been described as the key to devolution public spending above tax in scotland and wales has been criticized public spending is above tax in seven uk regions including four english regions if we treat equal citizens equally public spending will be above tax in poorer regions there is nothing extraordinary about spending above tax but there are important questions with regard to regional levels of expenditure in four regions london south east scotland and northern ireland public expenditure is well above the level expected for their degree of prosperity this article provides possible explanations

the informal sector in developed and less developed countries a literature survey the main goal of this study is two fold 1 to provide ageneral overview of the contributions to the literature on theinformal sector with a special focus on the public choiceapproach and 2 to compare these contributions across twoinstitutionally different types of countries developed andless developed developing and transition countries thepaper focuses on the criteria used to define the informalsector the relationship between the formal and informaleconomy tax evasion and public choice analysis it isstressed throughout this paper that the distinction betweenthe two types of countries is of key importance

gender differences in labor market decisions evidence from rural mexico this study examines gender employment differences in mexicos rural sector using the 1994 survey of rural entrepreneurs and financial services it employed an approach that separate the effects of initial endowments from the gender differences that can be attributed to preferences available opportunities labor market discrimination and other market conditions all of which referred to as labor market structural issues findings show that higher levels of education are associated with a higher employment propensity although the variable for some secondary schooling is not significant for men as expected married men are more likely to be employed than single men while for females the opposite results ensues which indicate that women in rural areas tend to specialize in non market activities particularly after marriage also gender differences in labor market experience proxied by age seems to influence the self employment choice these results have implications for public policy aimed at reducing gender inequality in labor market outcomes in rural mexico the main lesson is that policies that focus solely on individual endowments could have a limited impact on reducing gender inequality if they are not accompanied by policies addressing structural supply and demand factors that are unique to the study population and that influence the choice of women to enter and remain in the workforce

pension coverage and retirement savings of young and prime aged workers in canada 1986 1997 in this paper we assemble data from several household surveys to document how pension coverage of young and prime aged workers has evolved in canada between the mid 1980s and the mid 1990s we show that between 1986 and 1997 pension coverage has fallen significantly for men has dropped slightly for young women and has increased for prime aged women the decline in union density and employment shifts towards low coverage industries explain most of the decline in pension coverage of men and young women in contrast most of the increase in coverage of prime aged women remains unexplained while pension coverage has fallen for men and young women their real average contributions to registered retirement savings plan rrsps have increased substantially as a result the sum of the amounts they contributed to registered pension plans rpps and rrsps has increased markedly jel classification j26 j32 couverture des regimes de rentes et epargnes pour la retraite des travailleurs jeunes et de ceux dans la force de l ge au canada 1986 1997 dans ce memoire les auteurs assemblent des donnees de plusieurs enquetes sur les menages pour documenter l evolution de la couverture des regimes de rentes des travailleurs jeunes et dans la force de l ge entre le milieu des annees 80 et le milieu des annees 90 on montre que cette couverture a chute de maniere significative pour les hommes a decline legerement pour les femmes et s est accrue pour les femmes dans la force de l ge la chute du taux de syndicalisation et les deplacements de l emploi vers des secteurs ou la couverture est plus faible expliquent le gros du declin de couverture pour les hommes et les jeunes femmes quant a l accroissement de la couverture pour les femmes dans la force de l ge il demeure inexplique alors que la couverture des deux premiers groupes a decline leurs contributions aux regimes enregistres d epargne retraite reer ont augmente substantiellement en consequence le total des sommes qu ils ont contribuees aux regimes de rentes enregistres et aux reer ont augmente de maniere importante

coming out of the shadows estimating the impact of bureaucracy simplification and tax cut on formality in brazilian microenterprises abstract this paper evaluates the impact of a program of bureaucracy simplification and tax reduction on formality among brazilian microenterprises the simples program we document an increase of 13 percentage points in formal licensing among retail firms created after the program when compared to firms in ineligible sectors the impact on retailers is robust to a series of tests we find no impact on construction transportation services and manufacturing sectors

female participation and labor market attachment in rural canada this article explores the reasons for differences in female rural urban participation rates by estimating a dynamic model of participation allowing for unobserved heterogeneity and state dependence using canadian panel data the results suggest that overall observed differences in rural urban participation rates are primarily due to differences in observed socioeconomic characteristics however for women resident in low income households there is evidence that the operation of rural labor markets effectively lowers their participation rates copyright 2002 oxford university press

legitimacy and the benefits of firm formalization entrepreneurs in many emerging economies start their firms informally without registering with the state we examine how informality at the time of founding affected the performance of 12 146 firms in 18 countries across sub saharan africa our findings indicate that entrepreneurs who registered their firms at founding enjoyed greater success in terms of sales and employment but these benefits varied widely across countries consistent with the idea that legitimation processes account for these benefits countries in which people trust their government more had larger advantages associated with being formal

the impact of unionism on fringe benefit coverage abstract the estimated effect of unionism on fringe benefit coverage is shown to be relatively robust to econometric method the atypical characteristics of unionized workers especially their larger employer size higher wages and longer worker week explain between one and two thirds of their higher fringe benefit coverage

the regional dimension of taxes and public expenditure in ireland morgenroth e regional dimension of taxes and public expenditure in ireland regional studies in ireland as in many other countries there has been an ongoing debate on the nature degree and trends of regional imbalance however relatively little is known about the effects of policies at the regional level in ireland this paper considers two aspects of public policy namely the fiscal system and public expenditure in particular regional government accounts are constructed that identify the level of taxation subsidization and public expenditure at the regional level the analysis of these data confirms that the fiscal system does reduce relative income differences in ireland furthermore there are substantial resource transfers across regions morgenroth e les impots et les depenses publiques en irlande le point de vue regional regional studies en irlande comme dans la plupart des pays on discute du desequilibre regional de sa nature son importance et ses tendances cependant on sait tres

can informal firms hurt registered smes access to credit using firm level survey responses from 2009 to 2012 we examine whether competitors from the informal sector affect the credit constraints of registered smes in 86 countries worldwide we also investigate the role played by the quality of institutional environment in exacerbating or in alleviating such effect a weak quality of institutional environment strengthens inter linkages between the formal and the informal sectors increases the costs and decreases the benefits assumed by formal firms and reduces the costs attributed to informality moreover it also results in a large informal economy which influences perceptions about the substitutability between formal and informal goods and law evasion our findings indicate that registered smes facing competition from informal firms are more likely to be credit constrained than other formal smes that are not confronted with such competition this result is consistent with the parasite view and the entrepreneurial perspective of informality which assert that informal firms are capable of competing against registered smes and hurting the latter s profits further we find that such adverse impact manifests only in countries with weak rule of law and high degree of corruption and bureaucracy our results also show that registered micro and small firms are more likely to be affected by the presence of informal firm competitors than medium sized firms this is because the benefits of formality that include access to credit from financial institutions increase with firm size on the whole our findings suggest that governments must enhance their role in increasing access to credit to smaller firms and in providing incentives for informal firms to be integrated in the formal economy moreover in order to achieve inclusive growth our results highlight the importance of improving the business environment which affects all entrepreneurs

the regional dimension of public expenditure in england public expenditure in the uk has a location dimension with respect to the devolved arrangements for scotland wales and northern ireland there is no location dimension to the allocation of public expenditure to the regions of england nevertheless whether planned or not public expenditure impacts on the regions through the provision of services and associated employment and income generation this paper examines the methodological issues in assigning public expenditure to countries and regions and reviews existing and past patterns of public expenditure in english regions it then considers the relevance of this analysis to policy options for introducing an explicit regional dimension to the public expenditure allocation mechanism in england paradoxically english regional devolution is potentially more radical in its implications in terms of rupturing existing allocative mechanisms that lead to flows of expenditure than devolution in the territories where it can be interpreted as putting democrat

the role of regulation on entry evidence from the italian provinces this paper studies the effects of differences in local administrative burdens in italy in the years 2005 2007 preceding a major reform that sped up firm registration procedures combining regulatory data from a survey on italian provinces before the reform costs and time to start a business with industry level entry rates of limited liability firms it explores the effects of regulatory barriers on the average of the annual entry rates across industries with different natural propensities to enter the market the estimates of the cross sectional analysis show that lengthier and to some extent more costly procedures reduced entry in sectors with naturally high entry a one day delay in registration procedures reduces the entry rate in highly dynamic sectors by more than 1 percent these results hold when i include measures of local financial development and of efficiency of bankruptcy procedures are included

shadow economies size causes and consequences using various methods the size of the shadow economy in 76 developing transition and oecd countries is estimated average size varies from 12 percent of gdp for oecd countries to 23 percent for transition countries and 39 percent for developing countries increasing taxation and social security contributions combined with rising state regulations are driving forces for the increase of the shadow economy especially in oecd countries according to some findings corruption has a positive impact on the size of the shadow economy and a growing shadow economy has a negative effect on official gdp growth

when will the gender gap in retirement income narrow among recent retirees women receive substantially less retirement income from social security and private pensions than men increases in women s labor market attachment and earnings relative to men over the past 50 years provide some optimism for an improvement in female retirement income particularly for married women this study shows that women s income from social security and private pensions has improved only slightly relative to men over the past 25 years using data on people approaching retirement age over the next 20 years prospects for future improvement are investigated one of the main conclusions is that pension income among women particularly married women will rise sharply relative to men s over the next few decades but a substantial gap could remain even if women close the gap in experience and salaries

uk regional policy an evaluation introduct ion ities in unemployment during the recession of the early 1990s which bit deeply in the southern regions however the convergence of regional unemployment rates uk regional policy has existed at varying levels of intensity for nearly seven decades throughout its conceals persistent spatial disparities in unemployment at a higher level of disaggregation fig 2 shows that existence the overriding objective has been to provide economic help to the country s most heavily depressed those travel to work areas experiencing the highest unemployment rates in 1985 tend to be the same areas or least well ov areas a wide variety of policy measures have been used to create employment and thereby some 10 years later further table 1 shows that the spatial pattern of unemployment at county level has reduce unemployment in the areas with persistently high unemployment this paper has two primary aims remained remarkably stable broad regional aggregates conceal immense spatial disparities in unemployment rstly to identify the major bene ts of regional policy and secondly to investigate ways in which uk regional within regions and these spatial disparities are persistent over time it is this high unemployment persistence that policy can be made more evective and hence more eycient ultimately justi es spatially discriminating policies such as regional policy as a rst step it needs to be established that the uk actually has a regional problem it is easy to demonstrate the paper is organized as follows the next section identi es the major economic and social bene ts of that spatial disparities in unemployment at a broad level have virtually disappeared during the 1990s the regional policy followed by a review of recent government views on the case for regional policy the fourth north south divide that was so evident in the 1980s has been eroded by a substantial convergence in unsection compares two diverent approaches to solving regional problems the rst is a market based approach employment rates this is vividly illustrated in fig 1 which shows the dramatic narrowing of regional disparwhich aims to make local labour markets more exible

why do smaller firms pay less this paper uses data from the national longitudinal survey of young men and the current population survey for 1983 to examine the relationships among wages firm size and plant size we reach three key findings first plant size has little independent effect on wages once we have controlled for firm size for firms with fewer than 1 000 employees second we find evidence of sorting on observed and unobserved ability characteristics across firm sizes better educated and more stable workers are in larger firms third results from a first difference estimator indicate that about 60 percent of the wage size effect is due to unobserved heterogeneity when all firms are considered and about 100 percent when firms with 25 or more employees are considered

union effects on health insurance provision and coverage in the united states during the past two decades union density has declined in the united states and employer provision of health benefits has changed substantially in extent and form using individual survey data spanning the years 1983 97 combined with employer survey data for 1993 the authors update and extend previous analyses of private sector union effects on employer provided health benefits they find that the union effect on health insurance coverage rates has fallen somewhat but remains large due to an increase over time in the union effect on employee take up of offered insurance and that declining unionization explains 20 35 of the decline in employee health coverage the increasing union take up effect is linked to union effects on employees direct costs for health insurance and the availability of retiree coverage

poverty among minorities in the united states explaining the racial poverty gap for blacks and latinos the two largest minorities in the united states african americans and people of hispanic origin show official poverty rates at least twice as high as those of non hispanic whites these similarly high poverty rates between the two minorities are however the result of different combinations of factors related to the specific characteristics of these two groups in this article we analyse the role of demographic and labour related variables in the current differential of poverty rates among racial and ethnic groups in the united states and its recent evolution our results show first that these differentials are largely explained by differing family characteristics of the ethnic groups furthermore we show that while labour market activity of family members and a preponderance of single mothers play a more significant role in the higher poverty rates of blacks a larger number of dependent children is closely associated with higher poverty among latinos who also suffer from a larger educational att

a note on union non union benefit differentials and size of establishment abstract this research note has expanded podgursky s 1986 results concerning union non union differentials to benefits explicitly union impacts on pension and health insurance coverage are obtained by plant size our empirical results are based on may 1983 cps data of random sample of white males they indicate that the pattern of differentials for health insurance are very similar to those obtained by podgursky i e the union non union differentials are largest in small plants however the results for pension coverage indicate a u shaped union non union differential i e the smallest and largest plants are found to have the largest differential

taxation base in developing countries abstract informal sectors are larger in developing countries than in rich countries this is a result of higher fixed costs of entry into the formal economy in developing countries we show that raising barriers to entry is consistent with a deliberate government policy for raising tax revenue by generating market power and hence rents for the permitted entrants market entry fees foster the emergence of large taxpayers the rents can be readily confiscated by the government through entry fees and taxes on profits at a low administrative cost the relevance of the theory is assessed with a sample of 64 countries empirical analysis supports the results of the paper

explaining the decline in the offer rate of employer retirement plans between 2003 and 2012 workplace retirement plans deferred compensation plans dcs and deferred benefit plans dbs help workers save for retirement conveniently consistently and automatically but the percentage of

disability and the labour market an analysis of british males this paper attempts using data from the british labour force survey 1996 to examine to what extent differences in labour market outcomes between able bodied and disabled men may be attributed to differences in endowments of human capital and associated productivity differences both labour force participation and selectivity corrected human capital equations are estimated and decomposition techniques applied to them using the methodology of baldwin and johnson baldwin m johnson w g 1994 labor market discrimination against men with disabilities journal of human resources xxix 1 winter 1 19 the employment effects of wage discrimination against the disabled are also estimated evidence of both substantial wage and participation rate differences between able bodied and disabled men are found which have implications for the operation of the 1995 disability discrimination act

the changing geography of the military industry in britain lovering j 1991 the changing geography of the military industry in britain reg studies 25 279 293 a number of studies have suggested that defence spending has had a significant impact on the location of industry and the geography of labour markets this paper drawing on a recent study of the employment of research and development professionals in the uk defence industry confirms that defence spending and related employment has been concentrated in the south and west of england it also shows that a number of changes are underway the unusually large british defence industry is restructuring as a result of changes in supply and in demand following the end of the cold war major job losses are in process which may amount to a third of a million jobs in the 1990s this is associated with a spatial reorganization the effect of which is generally to consolidate high level activities in the industry in the south of england and deepen the spatial division of labour a key locational influence in this

plant size and the decline of unionism abstract declining plant size is shown to explain a significant portion of the recent decline in unionism particularly in manufacturing the paper also shows how to use the probit model to decompose the change in unionism into explained and unexplained components

union membership determination and industry characteristics recent literature on the economics of unionism has expanded beyond its customary focus on the wage and nonwage effects of collective bargaining and given increased attention to the determinants of union membership previous union membership studies have been couched primarily within an individual choice framework whereby utility maximizing individuals choose either to join or not to join a union empirical work typically treats membership as a function of some vector of personal characteristics 1 2 10 11 21 it is our contention that such studies can best be interpreted as explaining the determination of the union status of jobs and that several industry and firm characteristics in addition to personal characteristics can be expected to affect significantly union membership in this paper theory and evidence relating to the effects of firm and industry characteristics on union membership are presented industry level data are bridged with a large microdata set containing individual characteristics in order to examine the determinants of unionism among workers in manufacturing utilizing a simultaneous model and controlling for sample selection bias we find that product market concentration capital intensity establishment size and job risk significantly affect the likelihood of union membership