E26

Informal Economy; Underground Economy

“Sometimes you don't make enough to buy food” - an analysis of South African street waste pickers’ income

In this paper we use income data of 873 street waste pickers in South Africa to assess whether their income is sufficient to make a living and to identify the possible factors that may influence their income. The results can assist policy makers to make informed decisions in designing and implementing policies aimed at improving the street waste pickers’ income earning potential. The results of a linear and logistic regression analysis show that street waste pickers’ income is low and many of the street waste pickers in South Africa are trapped in persistent and chronic poverty.

Effects of Reducing Tariffs in The Democratic Republic of Congo(DRC): A CGE Analysis

In this paper, the effects of reducing tariffs are analysed through a Computable General Equilibrium (CGE) model of the DRC. The specific DRC Formal-Informal Model (DRCFIM) is a multi-sectoral computable general equilibrium model that captures the observed structure of the DRC’s formal and informal economies, as well as the numerous linkages or transmission channels connecting their various economic agents, such as investors, firms, traders, and the government. The parameters of the CGE equations are calibrated to observed data from a social accounting matrix (SAM).

Land Use in the Democratic Republic of Congo (DRC)

This paper examines the effects of land use in the DRC through the application of DRC formal-informal sector computable general equilibrium model, developed with the 2007 DRC Social Accounting Matrix. Two policy options are analysed. Firstly, the hypothetical policy change introduced in the short and long run application of this model is a land use subsidy where a 10% cut in the price of land both in the formal and informal sector is applied. In tracing the impact of this shock on the economy, as expected, gross domestic product and employment increase.

Wage Subsidy in the DRC: A CGE Analysis

This paper analyses wage subsidies on lower-skilled formal workers in the Democratic Republic of Congo (DRC). A multi-sectoral empirically-calibrated general equilibrium model capturing the economy-wide transactions between the formal and informal sectors is used to analyse one policy simulation in the DRC. The short and long run simulation in which the government provides wage subsidy to lower-skilled workers indicates that the government is able to significantly improve the deficiencies of the formal and informal households’ real disposable incomes.

Tax evasion and financial repression: A reconsideration using endogenous growth models

Using two dynamic monetary general equilibrium models characterized by endogenous growth, financial repression and endogenously determined tax evasion, we analyze whether financial repression can be explained by tax evasion. When calibrated to four Southern European economies, we show that higher degrees of tax evasion within a country, resulting from a higher level of corruption and a lower penalty rate, yields higher degrees of financial repression as a social optimum. However, a higher degree of tax evasion, due to a lower tax rate, reduces the severity of the financial restriction.

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