The Impact of Bank Credit on Employment Formality: Evidence from Uruguay

Gandelman, Néstor; Rasteletti, Alejandro

doi:10.1080/1540496x.2015.1024084

Cited by 8 publications

(3 citation statements)

References 14 publications

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“…A reform that simplified the process of opening a business in Mexico was successful in increasing the number of registered businesses, but had no impact on informality: the owners of the new businesses were former employees of formal firms, not informal workers Kaplan, Piedra, and Seira 2011). Financial deepening contributed to a reduction in informality in Uruguay, particularly for women and older workers (Gandelman and Rasteletti 2016).…”

Section: B Personal Income Tax Rates a Corporate Income Tax Ratesmentioning

confidence: 99%

The Long Shadow of Informality: Challenges and Policies

Ohnsorge¹,

Yu²

2022

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By definition, the informal economy is hard to study, especially in developing countries. This excellent book uses state-of-the-art methodologies and recently available data to measure and analyze informality in advanced economies and emerging market and developing economies. In particular, it explores the business cycles in the informal sector in 160 countries over the past 30 years; the study is the first one to show that cycles in the formal economy cause those in the informal economy. Contrary to the widespread stereotype that the informal sector is a buffer that helps to mitigate recessions in the formal sector, the informal sector's output moves in sync with the formal one, and informal employment does not increase during recessions. This book also produces the first analysis of the role of informality during the COVID-19 pandemic. Informal economic activity is concentrated in labor-intensive service sectors and thus is especially vulnerable to social distancing and lockdowns. A rigorous, relevant, and highly timely must-read for development scholars and policy makers.

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Section: B Personal Income Tax Rates a Corporate Income Tax Ratesmentioning

confidence: 99%

The Long Shadow of Informality: Challenges and Policies

Ohnsorge¹,

Yu²

2022

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“…The author finds that once transactions characteristics are included in the estimations, income and age play a minor role in explaining households' payment instrument choice in Uruguay. Gandelman and Rasteletti (2015) study the impact of bank credit on employment formality and find that financial deepening decreases informality, especially for female and older workers. Sanromán and Santos (2014) use the Financial Survey of Uruguayan Households to study the determinants of accessing financial services, specifically having a credit card and a bank account.…”

Section: Literature Reviewmentioning

confidence: 99%

The Impact of a Financial Inclusion Program on Household’s Payment Choice, Savings, and Credit

Gandelman¹,

Lluberas²,

Misail³

et al. 2023

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Uruguay implemented an ambitious financial inclusion program that included a fiscal stimulus through VAT rebates and subsidies for point of sale (POS) adoption. One of its main provisions banned cash payment of wages and social benefits and forced financial institutions to open wage-accounts with extremely beneficial conditions. In the aggregate, the number of debit cards transactions increased sharply. We test the wage-banking channel of the financial program exploiting differences in the treatment intensity between public sector and private sector workers. We find that while the provision of bank accounts increased the number of debit cards, it had modest effects on the probability of payment with cards that are mostly produced by a more intensive use of debit cards by those who already had them before the Financial Inclusion Act went into effect. Thus, the aggregate effects must be produced by the fiscal channel of the financial inclusion program. Finally, we fail to find effects on either access to short-term credit or expenditure or savings.

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“…However, in the first years, it will be possible to enforcement and lowering labor informality via an increase and improvement of fiscalization (Oviedo et al, 2009), incentives to formalize low-income jobs (Loayza, 2018;Oviedo et al, 2009), and/or for example, by making it compulsory to pay wages directly into a bank account. The experiences of Brazil (Cardoso, 2016;Catão et al, 2009), Peru (Morón et al, 2012), and Uruguay (Gandelman & Rasteletti, 2016) show that firms with higher access to financial services (bankarization) would decrease informality for their workers.…”

Section: Mitigation Policiesmentioning

confidence: 99%

Effects of COVID‐19 early release of pension funds: The case of Chile

Lorca

2021

J of Risk & Insurance

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Amid the extraordinary economic effects of COVID-19, some policymakers have turned to retirement accounts to support individuals in financial hardship. Given the haste, the long-term impacts and their heterogeneity have scarcely been analyzed. Using Monte Carlo simulations on the Chilean Social Protection Survey linked with administrative data, this study quantifies the effects of a 10% early release of pension funds. Each withdrawn dollar brings losses of 1.59 dollars in future retirement savings, reducing monthly pension benefits by 7.26%. This policy raises income inadequacy and inequality in retirement, increasing government expenditure by 4.33% to counteract these effects for 65-year-old retirees. We propose four policies to mitigate these effects and address the current challenges of most defined contribution pension schemes. Increasing contributions combined with an intragenerational solidarity component shows the biggest impacts. Contribution enforcement, reducing tax evasion, and delaying retirement by at least 1 year via incentives have lower but significant effects.

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The Impact of Bank Credit on Employment Formality: Evidence from Uruguay

Cited by 8 publications

References 14 publications

The Long Shadow of Informality: Challenges and Policies

The Long Shadow of Informality: Challenges and Policies

The Impact of a Financial Inclusion Program on Household’s Payment Choice, Savings, and Credit

Effects of COVID‐19 early release of pension funds: The case of Chile

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