Estimating the Effects of Informal Economic Activity: Evidence from Los Angeles County

Marcelli, Enrico A.; Pastor, Manuel; Joassart, Pascale M.

doi:10.1080/00213624.1999.11506187

Cited by 76 publications

(49 citation statements)

References 16 publications

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“…There is also no evidence that personnel in the services and construction sectors are attracted to formal sector activity (non significant coefficients). This result is at odds with that of Marcelli et al (1999) and Losby and Edgcomb (2002) who find that households from the services and construction sectors are more likely to supply services in the informal sector. Persons employed by the government are marginally less likely than the self-employed (reference modality) to be involved in the demand for and supply of goods and services in the informal sector (negative coefficient significant at 10%), which seems to be accord with results obtained by Hart (1970Hart ( , 1973 who observes that self-employed persons tend to be major suppliers in the informal sector, since they have more freedom in reporting their incomes and they could under-report or not report their income at all.…”

Section: Empirical Investigation Of the Decision To Participate In Thcontrasting

confidence: 56%

Characteristics of households in the informal sector of an emerging economy

2009

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Using the case study of Trinidad and Tobago, we investigate the socio-economic, demographic, and attitudinal characteristics of households that participate in the informal sector of an emerging economy and their perception of the risk of detection by tax authorities while doing so. Data are gathered from a cross-sectional field survey covering 570 households. Results using multinomial logit and ordered probit models suggest that households are motivated to participate in the informal sector when members spend little time in formal sector activity, believe that taxes are too high and their incomes are too low, have dependents to support and believe that the resulting tax evasion will go undetected. Their perception of the risk of detection by the tax authority is determined largely by the income they earn in the formal sector and the extent of government bureaucracy prevailing there. JEL CLASSIFICATION NUMBERS: C25, C51, E26.

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Section: Empirical Investigation Of the Decision To Participate In Thcontrasting

confidence: 56%

Characteristics of households in the informal sector of an emerging economy

2009

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“…Empirical evidence indicates that informal work in most developing countries is concentrated in the distribution sector, with a relatively low prevalence in certain sectors, such as the manufacturing sector (Castells andPortes 1989, International Labour Organisation 2002). Further, Marcelli et al (1999) and Losby and Edgecomb (2002) find that the characteristics of the construction sector make it easy to use the services of informal workers. Lemieux et al (1994) establish that there is a negative relationship between time spent in the informal and formal sectors, while Schneider and Enste (2003) provide evidence that some agents move seamlessly between the two sectors.…”

Section: Socio-economic and Demographic Considerationsmentioning

confidence: 99%

Small-Business Participation in the Informal Sector of an Emerging Economy

Sookram

Watson

2008

The Journal of Development Studies

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We investigate the characteristics of the owners of small businesses that participate in the informal sector of an emerging economy and their perception of the risk of detection by tax authorities while doing so. Data are gathered from a survey covering 1027 small businesses in Trinidad and Tobago. Results suggest that small-business owners are motivated to participate in the informal sector when they believe that the risk of detection by the tax authorities is low and that government regulations are burdensome, but there is no evidence that the tax rate itself is an issue. Their perception of the risk of detection by the tax authority is determined largely by the time they spend and the income they earn in the formal sector.

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“…Reviewing the extensive literature, at least 45 different adjectives have been employed to describe informality, including 'atypical', 'cash-in-hand', 'hidden', 'irregular', 'non-visible', 'shadow', 'undeclared', 'underground' and 'unregulated'. Nearly all describe what is insufficient or missing relative to the formal economy. Despite these diverse terms, however, a strong consensus is that what is missing or absent is that this remunerated production and sale of goods and services is legitimate in all respects besides the fact that it is unregistered by, or hidden from the state for tax and/or benefit purposes (European Commission, 1998;Evans et al, 2006;Katungi et al, 2006;Marcelli et al, 1999;OECD, 2000OECD, , 2002Renooy et al, 2004;Portes, 1994).…”

Section: Introductionmentioning

confidence: 99%

Do small business start-ups test-trade in the informal economy? Evidence from a UK survey

Williams

Martínez

2014

IJESB

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Abstract:The aim is to evaluate critically whether small businesses start-up in the informal economy and whether they do so to test-trade the viability of their businesses. Reporting a 2012 survey of 595 small business owners in the UK, 20% report trading informally when starting their business, 64% of whom asserted a main reason was to test its viability. Some 13% of all small businesses therefore start-up test-trading in the informal economy, although multivariate analysis shows that businesses started by men, with low current annual turnovers in particular sectors are significantly more likely to do so. Regional variations are not significant. The outcome is a call for not only similar studies in other countries to determine the proportion of enterprises that start up test-trading in the informal economy but also a discussion of the policy implications of this finding.

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Estimating the Effects of Informal Economic Activity: Evidence from Los Angeles County

Cited by 76 publications

References 16 publications

Characteristics of households in the informal sector of an emerging economy

Characteristics of households in the informal sector of an emerging economy

Small-Business Participation in the Informal Sector of an Emerging Economy

Do small business start-ups test-trade in the informal economy? Evidence from a UK survey

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