114 research outputs found
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Informal economy and extractive institutions
Full text linkThe paper aims at assessing the impact of the extractiveness of institutions on the size of the informal economy. After the identification of the variables suitable to proxy the distinct features of institutions, among which their extractiveness, the paper offers a battery of cross-section regressions over two large samples of developed and developing countries. The results suggest that the extractiveness of institutions is a significant determinant of the size of the informal economy and that greater informality is associated with a higher perceived distrust in formal institutions. The results are robust to the inclusion of standard controls, as well as proxies for culture, generalized trust and generalized morality
Remittances, Lorenz Dominance in the Distribution of Income and Redistribution
No full textWe analyze how changes in the distribution of income, characterized by the comparison of Lorenz curves, affect public redistribution for an economy with international interfamily transfers (remittances). Our analysis suggests that a fall in the inequality of income might increase or reduce the government’s ability to collect tax revenue and its electoral costs from inefficient taxation which in turn affect public redistribution. The main contribution of this paper is to characterize conditions in which a shift towards a dominant Lorenz curve can lead to an increase or fall in public redistribution. We also find that the composition of a change in the distribution of income, promoted by a change in the distribution of labor income or remittances, leads to different effects on the size of public redistribution
Did the Exchange Rate Floor Prevent Deflation in the Czech Republic?
Full text linkTo fight deflationary pressures at the zero lower bound, in November 2013, the Czech National Bank (CNB) introduced a one-sided floor on the exchange rate, as an additional monetary policy instrument. This paper investigates the impact of the FX floor on inflation in the Czech Republic, by comparing actual inflation with counterfactuals in the absence of the exchange rate floor. Three different empirical strategies are implemented: an event study, difference-in-difference regressions and a synthetic control method. The empirical results provide evidence that the exchange rate was effective in fighting deflationary pressures and prevented inflation from going into negative territory. The magnitude of the effect ranges between 0.5 to 1.5 percentage points. The results are robust to different econometric specifications
VAT Evasion in Bulgaria: A General-Equilibrium Approach
Full text linkThis paper utilizes an otherwise standard micro-founded general-equilibrium setup, which is augmented with a revenue-extraction mechanism to assess the magnitude of VAT evasion. The model is calibrated to Bulgaria after the introduction of the currency board (1999-2014), as one of the very few countries in Europe with a nondifferentiated consumption tax rate, and an economy where VAT revenue makes almost half of total government tax revenue. A computational experiment performed within this setup estimates that on average, the size of evaded VAT is a bit more than onefourth of output, an estimate which is in line with the figures provided in both Philip (2014) and the European Commission (2014). In addition, model-based simulations suggest that increases in spending on law and order could generate substantial welfare gains by decreasing VAT evasion
Political Regime Change and State Performance
Full text linkThe present model analyses how the state would provide services when the change of power depends upon the performance of the state. Agents can evaluate state performance based either only on the receipt of government services, or both on the benefit from government services and taxes imposed. With a credible threat of power change, if the valuation of the government services is low, along with a low fiscal capacity, then it is less probable that this service would be provided. Furthermore, such an allocation is compared with a situation, when there exists a threat of active opposition. Interestingly, that threat does not change the optimum provisioning of government services (as compared to the previous situation) in the equilibrium
Bringing in Liquidity and Transparency when the Power Sector is Consolidated: The Duty to Trade on the Power Exchange
Full text linkThe present model analyses how the state would provide services when the change of power depends upon the performance of the state. Agents can evaluate state performance based either only on the receipt of government services, or both on the benefit from government services and taxes imposed. With a credible threat of power change, if the valuation of the government services is low, along with a low fiscal capacity, then it is less probable that this service would be provided. Furthermore, such an allocation is compared with a situation, when there exists a threat of active opposition. Interestingly, that threat does not change the optimum provisioning of government services (as compared to the previous situation) in the equilibrium
Female Labor Force Participation and Voter Turnout: Evidence from the American Presidential Elections
Full text linkThis study investigates a state-level panel dataset for the five most recent U.S. Presidential elections, namely, 2000, 2004, 2008, 2012, and 2016, for which all data needed to reflect all of the variables in the model are available. While the general objective is to shed further insights into identifying factors that in a contemporary setting influence the aggregate voter participation rate in such elections, the emphasis is on the impact of the female labor force participation rate, which is hypothesized, ceteris paribus, to positively affect aggregate voter turnout. Several Cross Section Random Effects estimates are undertaken, each of which supports the hypothesis. Indeed, the semi-log estimate implies that a one unit (one percentage point) higher level for the female labor force participation rate in a state is associated with a 0.61% higher overall voter turnout in the state. Although the nation’s female labor force participation rate in the U.S. has effectively stabilized, there is considerable interstate variation in this variable; thus, candidates for elected office in states with higher female labor force participation rates and/or growing female labor force participation rates would be well advised to be sensitive to the needs of this demographic when campaigning
Product and Labour Market Regulations, Production Prices, Wages and Productivity
Full text linkThis study is an attempt to evaluate the effects of product and labour market regulations on industry productivity through their various impacts on changes in production prices and wages. In a first stage, the estimation of a regression equation on an industry*country panel, with controls for country*industry and country*year fixed effects, show that multi-factor productivity is negatively and significantly influenced by both indicators of industrial prices from same industry and weighted average of industrial prices from other industries, and by indicators of country wages weighted by industry labour shares for low and high skilled workers. In a second stage, an economic policy simulation of the implications these results on the basis of their calibration by the OECD product and labour market anti-competitive regulation indicators suggests that nearly all countries could expect sizeable gains in multifactor productivity from deregulation reforms
Wage Dispersion and the Minimum Wage Spike in a Search Economy With Wage-Posting
Full text linkWage distributions in economies with mandated minimum wage exhibit both wage dispersion and wage clustering known as the minimum wage spike. The paper builds a search-theoretic model that reconciles the two phenomena simultaneously under the assumptions of wage-posting, urn-ball matching, rm heterogeneity, and wage-dependent search cost. Numerical simulations demonstrate the potency of the model. A non-degenerate minimum wage spike and wage dispersion are obtained. The model also shows that a higher, non-binding minimum wage can be associated with greater employment (and higher wages), previously found in empirical studies
Sources of Labour Productivity Growth at Sector Level in Britain, 1998-2007: a Firm-Level Analysis
Full text linkThis article focuses on the sources of labour productivity at a disaggregated sector level using a range of methods for decomposition, including the dynamic Olley-Pakes decomposition method introduced by Melitz and Polanec (2015) which offers an alternative approach to the standard dynamic decomposition developed by Foster, Haltiwanger and Krizan (2001). Our findings indicate that at the firm level, entry and exit played a relatively minor role in improving labour productivity growth in Britain between 1998-2007, although this masks a great deal of variability in the performance of entrants and exitors. A much more significant contribution to labour productivity throughout the period was achieved through the market share growth of incumbent firms with above average productivity. The interpretation of findings is sensitive to underlying assumptions and the approach adopted