Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. www.econstor.eu Non-compliance of firms with tax regulations is a major constraint on state capacity in developing countries. We focus on an arguably under-appreciated dimension of noncompliance: under-reporting of wages by formal firms to evade payroll taxes. We develop a simple partial-equilibrium model of endogenous compliance by heterogeneous firms to guide the empirical investigation. We then compare two independent sources of individual-level wage information from Mexico -firms' wage reports to the Mexican social security agency and workers' responses to a household labor-force survey -to investigate the extent of wage under-reporting and how it responded to an important change in the social security system. We document that under-reporting by formal firms is extensive, and that compliance is better in larger firms. Using a difference-in-differences strategy based on the 1997 Mexican pension reform, which effectively tied pension benefits more closely to reported wages for younger workers than for older workers, we show that the reform led to a relative decline in under-reporting for younger workers. Within metro area/sector/firm size cells, the decline in under-reporting was greater in cells initially employing a younger workforce on average. The empirical patterns are consistent with our theoretical model and suggest that giving employees incentives and information to improve the accuracy of employer reports can be an effective way to improve payroll-tax compliance. Terms of use: Documents in D I S C U S S I O N P A P E R S E R I E SJEL Classification: O17, H26, H55

Comparing two sources of wage data in Mexico — firms' reports to the social security agency and individuals' responses to a household survey — we document extensive under-reporting of wages by formal firms, with compliance better in larger firms. We also present evidence that the 1997 Mexican pension reform, which tied pension benefits more closely to reported wages for younger workers, led to a relative decline in under-reporting for younger age groups. The results suggest that giving employees incentives and information to improve the accuracy of employer reports can be an effective way to improve payroll-tax compliance.

We show that a short-term (31 day) reading program, designed to provide age-appropriate reading material, to train teachers in their use, and to support teachers' initial efforts for about a month improves students' reading skills by 0.13 standard deviations. The effect is still present three months after the program but diminishes to 0.06 standard deviations, probably due to a reduced emphasis on reading after the program. We find that the program also encourages students to read more on their own at home. We find no evidence that improved reading ability improves test scores on other subjects.

This paper shows that trade policy can have significant intergenerational distributional effects across gender and social strata. We compare women and births in rural Indian districts more or less exposed to the 1991 trade reform. For low socioeconomic status women, the tariff cuts increased fertility and improved the sex ratio at birth and the relative survival rate for girls. On the contrary, fertility decreased and the sex ratio at birth and the relative survival rate for girls worsened among high-status families more exposed to the tariff cuts. Moreover, relative female income increased (decreased) for lower-caste (upper-caste) women.

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