Multiple Unofficial Economy Equilibria and Income Distribution Dynamics in Transition Economies

Rosser, J. Barkley; Rosser, Marina V.; Ahmed, Ehsan

doi:10.1037/e625942011-001

Cited by 26 publications

(26 citation statements)

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“…Confirming the direction and sign of the impacts discussed in Section 4.2, the results show that the peso crisis has a statistically significant and positive impact on informality and that informality has a strong and positive impact on wage inequality. The magnitude of the impact of informality on wage inequality is impressively consistent across the two wage inequality measures, and the positive sign of the impact confirms the results of the previous literature (Rosser et al 2003;Binelli and Attanasio 2010).…”

Section: Resultssupporting

confidence: 85%

“…Rosser et al (2003) estimate a cross-country regression for 18 transition economies in the 1990s and find that the share of the informal sector has a positive and significant impact on the level of the Gini index for wage inequality. Binelli and Attanasio (2010) use time-series data for Mexico between 1987 and 2002 and find that an increase in informality is positively and statistically significantly correlated with a substantial increase in wage inequality.…”

Section: Previous Literaturementioning

confidence: 99%

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Wage inequality and informality: evidence from Mexico

Binelli

2016

IZA J Labor Develop

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While several studies have documented the expansion of the informal sector and its detrimental impact on development, few have noted that informality and wage inequality tend to move together. Using Mexico as a case study, I show that between 1987 and 2002 wage inequality within informal workers accounted for over 60 % of total wage inequality and that the Mexican financial crisis of the mid-1990s increased the share of informal workers and, via this, wage inequality. The results provide supportive evidence that in Mexico higher wage dispersion is one of the channels through which informality negatively affects development. JEL codes: O17, J31, C36.

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Section: Resultssupporting

confidence: 85%

Section: Previous Literaturementioning

confidence: 99%

Wage inequality and informality: evidence from Mexico

Binelli

2016

IZA J Labor Develop

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“…This, in turn, can affect the State's ability to redistribute both directly and indirectly through education, which can have a direct impact on inequality. This type of argument has been incorporated by Rosser et al (2000Rosser et al ( , 2003 for example, who also find a positive correlation between informality and the Gini coefficient in transition economies, and explicitly recognize that different causal mechanisms may operate in both directions. Binelli and Atanassio (2010), using microdata for Mexico, show that wage inequality is much higher among informal workers and that changes in the size of the informal sector closely follow changes in wage inequality.…”

Section: Motivation: Informality and Inequalitymentioning

confidence: 99%

Decomposing inequality changes in Uruguay: the role of formalization in the labor market

Amarante

Arim

Yapor

2016

IZA J Labor Develop

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During the first decade of the twentieth century, the Uruguayan labor market showed a significant decline in wage inequality and in the incidence of labor informality, while similar changes also took place in other Latin American countries. These trends were observed in a period of strong economic dynamism. Most extended explanations for this declining inequality in the region have been centered on falling returns to education. The main goal of this paper is to present new evidence on the relation between informality and wage inequality through a RIF-based regression decomposition analysis which, besides confirming the relevant role of education, shows that the process of labor market formalization also played a significant role in the reduction of inequality in Uruguay, mainly through a price effect.JEL Classification: D31, J31

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“…They found no connection among tax rates and the shadow economy, but found a robust relation among tax rates and income equality. Rosser et al (2003) demonstrated that income inequality is correlated strongly and significantly with the size of the shadow economy in the transition economies. Filho and Estevao (2012) used two methods to estimate the size of shadow economy in Brazil through the period of 2003 to 2011, those two methods were the monetary approach and the labor market approach.…”

Section: Literature Reviewmentioning

confidence: 99%

The Shadow Economy in Palestine: Size and Causes

Sabra¹,

Eltalla²,

Alfar³

2015

IJEF

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The study aims to measure the size of the shadow economy in Palestine during the period 1995-2012 by using multiple regression method. In addition, the study aims to assess the main reasons that affect the size of the shadow economy. By using latest data and multiple regression method, this paper finds that, the size of shadow economy is between (57%-88%) of GDP. The size of shadow economy in Palestine is very high due to the political situation, which are a result of the Israeli occupation since 1967 and the blockade of Gaza strip. The main factors that affect the size of the shadow economy in Palestine is the ownership of businesses, an increase of ownership by 1% to the total employment leads to an increase in the shadow economy size by 0.57%. Another important reason that affects the size of the shadow economy is the tax burden. According to our results, an increase of tax burden by 1% leads to an increase in the shadow economy size by 0.54%. Other factors that affect the size of shadow economy in Palestine like the unemployment rate; growth rate and intensity of regulations are included in our study and have a significant effect. The shadow economy in Palestine plays a negative role that decreases the tax collections and affects the governmental fiscal policies.

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Multiple Unofficial Economy Equilibria and Income Distribution Dynamics in Transition Economies

Cited by 26 publications

References 0 publications

Wage inequality and informality: evidence from Mexico

Wage inequality and informality: evidence from Mexico

Decomposing inequality changes in Uruguay: the role of formalization in the labor market

The Shadow Economy in Palestine: Size and Causes

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