Informality: Causes,consequences and policy responses

A stylized prediction of the development economics discourse is that informality will disappear with development, and yet in the last 20 years conventional measures of informality, far from declining, have either remained stagnant or have actually increased. This includes countries such as India where economic growth has been at historically high levels. What exactly is informality and what are its magnitudes and trends? What are the causes of informality and why is it not decreasing as predicted by standard theories of development? What are the consequences for inclusive economic growth of a large and increasing informal sector? What are feasible and desirable policy responses to informality? These are the questions that motivate this broad based overview of informality. The questions will be addressed based on recent and ongoing research on India and globally.     

Mexico in the 1990s: The Main Cross-Sectional Facts

This paper describes the main cross-sectional facts on individual and household earnings, labor supply, income, consumption and wealth in Mexico in the decade of the 1990s. We use two different data sources: the Mexican Employment Survey (ENEU) and the Mexican Income and Expenditure Survey (ENIGH). The contribution of this paper is twofold. First, we integrate the two surveys to provide a complete characterization of the changes in employment, wages, income, consumption and wealth in the 1990s. Second, we highlight some distinctive features that characterize the Mexican economy in this decade. In particular, we focus on the changes in the size of the informal sector and we study the relationship between changes in informality and changes in wage inequality.     

中国的区域关联与经济增长的空间溢出效应

本文使用探索性空间数据分析工具研究了1988-2009年间中国各省区人均GDP的空间分布格局与特征,结果显示:一方面,存在着全域范围的正的空间自相关性,并且这种相关性随着时间的推移在增大;另一方面,局域相关也显示出中国局域性的空间集聚特征越来越明显。以一个表征市场潜能对地区经济发展影响的新经济地理学模型为基础,本文通过计量分析进一步考察了中国区域经济发展的空间溢出效应。经验分析表明,空间溢出效应是中国地区经济发展不可忽视的重要影响因素,市场潜能每增长1%,地区人均GDP增长率将提高0.47%,超过了地区固定资产投资增长的弹性值。当然,实证分析也发现这种空间溢出效应会随着地区间距离间隔的增加而减少。     

技术增长率的部门差异和经济增长率的“驼峰形”变化

迄今的长期经济增长历史表明,经济增长速度具有"驼峰形"特征,即中等收入时增长速度快,人均收入水平高时次之,收入水平低时最慢。经济增长的历史同时表明,增长速度快的时期几乎都伴随着经济结构剧烈变化。本文试图在新古典理论框架内,构建经济增长模型来解释驼峰形特征以及促成它的经济结构变化。数值实验表明,模型结果合理地解释"驼峰形"的经济事实,而且与Kaldor事实和Kuznetz事实同时相容。     

Structural change and foreign direct investment: globalization and regional economic integration

This paper investigates flows of inward and outward foreign direct investment (FDI) and FDI-to-GDP ratios in a sample of 62 countries over a 30 year time span. Using several endogenous structural break procedures (allowing for one and two break points), we find that: (1) the great majority of the series have structural breaks in the last 15 years, (2) post-break FDI and FDI/GDP ratios are substantially higher than the pre-break values, and (3) most breaks seem to be related to globalization, regional economic integration, economic growth, or political instability. Static and dynamic panel-data analyses accounting for and/or addressing endogeneity, simultaneity, nonstationarity, heterogeneity and cross-sectional dependence show that FDI is negatively related to exchange rate volatility and GDP per capita, but positively related to some regional integration agreements, trade openness, GDP, and GDP growth. Most notably, the European Union is the only regional economic integration unit found to consistently have significant and positive effects on FDI.     

出口对中国GDP增长的贡献——基于投入产出表的实证分析

本文推导了利用投入产出表计算出口对GDP形成及增长贡献的方法。在1 997年投入产出表的基础上本文计算了 1 997年— 2 0 0 1年我国出口对GDP形成及增长的贡献 ,计算并分析了各部门的出口对GDP增长的贡献 ,分析并揭示了 1 997年— 2 0 0 1年单位出口贡献率下降的原因。     

The effect of financial development on economic growth: a meta-analysis

In this article, we contribute to the current debate on the sign and size of the finance–growth relation. To this purpose, we use a meta-analysis with 551 estimates from 68 empirical studies that take private credit to GDP as a measure for financial development. We distinguish between linear and logarithmic specifications. First, we find evidence of significantly positive publication bias in both the linear and log-linear specifications. It suggests the literature has exaggerated the size of the finance–growth effect in the past. Second, we find suggestive evidence that the logarithmic specification is superior to the linear specification. In the logarithmic specification when accounting for publication bias, a 10% increase in credit to the private sector increases economic growth with 0.09 percentage points. For the linear estimates, no significant effect of credit to the private sector on economic growth is found on average. Overall, the evidence points to a positive but decreasing effect of financial development on growth and supports the ‘too much’ finance hypothesis.     

Collective Leadership,Career Concern,and the Housing Market in China: The Role of Standing Committees

Despite an emerging literature on political determinants of economic performance, little is known about whether standing committees of the Communist Party, an institution of collective leadership, matter for economic development. Using Chinese provincial‐level panel data, we find that a higher ratio of new members in the standing committee of the local Communist Party is correlated with a higher housing sales/gross domestic product (GDP) ratio. Moreover, more new members in the standing committee are also associated with a lower level of GDP per capita and a lower manufacturing output growth rate. The results on the size of the real estate sector are robust to dealing with the endogeneity of the ratio of new standing committee members. Our findings suggest that career incentives of party leadership affected real estate development at the expense of manufacturing growth in the locality, and that the structure of collective leadership has important economic consequences.     

The heterogeneous effects of labor informality on VAT revenues: Evidence on a developed country

The value-added tax is spread in many countries primarily because it allows rising public revenues, but its revenue performance can be undermined in the presence of informality. We document the existence of heterogeneous effects of labor informality on VAT collection in a developed country such as Italy. By using novel regional administrative data on VAT revenues, we find that labor informality produces negative effects on total VAT collection, including VAT on production and consumption, and positive effects on VAT revenues from consumption only. We also find that the consequences of labor informality on VAT collection depend on the size of informality, by approximating an-inverted U-relation. As for Italy, we explain such heterogeneous effects with the presence of regional differences in labor market conditions. We also document that labor informality has heterogeneous effects on VAT collection when considering specific productive sectors, and the cyclical consequences of the Great Recession.     

Estimating the impact of government consumption on growth: Growth accounting and endogenous growth models

Panel data is analyzed on government consumption and GDP growth in 116 countries, 1950–90. The purported positive impact of government growth on GDP growth is due to simultaneity bias. The negative cross-national correlation between government size and economic growth reflects in part an equilibrium relationship. Growth is a non-monotonic function of government size (measured at current domestic prices). Growth rates are increasing in government consumption expenditures up to a level around 12 percent of GDP.     

基于经济指标构建的社会稳定风险评估研究

本文选用人均GDP、 GDP增速、基尼系数、物价指数和失业率等5项经济指标对社会稳定风险进行了评估,结果表明：国际横向比较,我国社会稳定程度目前处于中等偏上水平,主要得分在高速的GDP增长、较低的物价指数和失业率方面;自身纵向比较,我国社会稳定风险近年呈加大趋势,主要失分在贫富差距扩大和通货膨胀压力上升方面。笔者的分析结果显示,确保在贫富分化项上不再失分甚至有所加分,即确保贫富差距不再扩大并力争有所缩小,对于保持社会稳定极其重要。     

中国GDP增长与CPI:关系、均衡与“十二五”预期目标调控

通货膨胀率和经济增长率之间动态关系的认识是宏观调控的基础,然而,目前在线性和静态的分析框架内未能揭示出通货膨胀和经济增长的复杂动态关系。本文运用1996—2009年GDP增长率、CPI与M2增长率的季度数据建立我国经济增长与通货膨胀的非线性动力系统模型(GDP-CPINLDS),揭示了我国最优的季度GDP增长率和CPI,以及零通货膨胀的季度GDP增长率。总体上,我国经济增长与通货膨胀处在次优化的非均衡运行状态,两者呈现出同向性变动的特点。最优调控实验表明,仅调节M2增长率不能完全实现"十二五"调控目标。文章建议"十二五"期间要以调控GDP增长为导向,以从紧货币政策为基础,配合多种调控手段,形成强有力的联合调控机制,以确保GDP增长率和CPI目标的最优实现。     

增长速度与增长转型:孰轻孰重?--关于中国GDP调增的冷思考

经过经济普查,2004年中国GDP调增16．8％。GDP调大虽然使一些比例关系得到优化并有利于今后的科学决策。但是,我们应该清醒地看到,GDP调大并不表示财富从天而降,更不意味着GDP制造过程中的诸多问题自动清零,调整增长战略、创新增长方式,应该成为我们最大的追求。     

Export-led Growth in South Asia: A Panel Cointegration Analysis

Abstract

In this paper, we attempt to examine the export-led and manufacturing export-led growth hypothesis for four South Asian Countries; namely, India, Pakistan, Bangladesh and Sri Lanka, using Pedroni’s panel cointegration technique for the period 1980–2002. In this context we estimate growth accounting equations to investigate the impact of exports, manufacturing exports and other important physical and human capital variables on both total GDP and non-export GDP. The study finds long-run equilibrium relationship between GDP (and non-export GDP) and exports along with other variables supporting export-led growth hypothesis. The results also substantiate the existence of manufacturing export-led growth hypothesis. Further, we find that export, fixed capital formation, public expenditure on health and education have statistically significant coefficients re-emphasizing the importance of these variables for higher economic growth.     

我国出口依存度与经济风险承受能力的非匹配性

近两年,受国际经济形势的影响,我国GDP增长速度、价格水平持续出现较大幅度的下降,同时失业率大幅度上升,这与我国长期以来的"低消费、高投资、高出口"的增长模式有关.2007年以前,出口高速增长虽然对我国的经济增长做出了一定贡献,但过高的出口依存度也给我国经济带来巨大的贸易摩擦风险、产业风险、就业与收入风险、经济安全风险.这些风险无论是从供求总量角度,或是从物价水平角度,还是从就业角度来看,都超出了我国经济的承受能力.我国出口依存度与经济风险承受能力的非匹配性是我国近两年经济下滑的主要原因.     

The Impact of the Shadow Economy on Indirect Tax Revenues

This paper examines empirically the impact of the shadow economy on indirect tax revenues in an unbalanced panel of 125 countries for the period 1990–2011. The same analysis is conducted excluding at first and then including international trade tax revenues in (total) indirect tax revenues, as a way to disentangle any impact of trade liberalization. In both cases, the results suggest that the size of the shadow economy increases the ratio of indirect tax revenues to GDP, as long as informality does not exceed a cutoff value. When the size of the shadow economy exceeds that level, any further increase affects indirect taxation negatively. The findings are robust to a number of sensitivity tests and when addressing the problem of potential endogeneity. The empirical evidence is in line with the predictions provided by the theoretical framework of the paper.     

What policies to combat labour informality? Evidence from Mexico

Informality often concerns policymakers due to its negative implications on productivity and poverty. In recent years, the extent of informal employment has diverged across Mexican states. Varying informal employment dynamics within a comparable institutional environment offers scope to identify policies that can reduce informality. This paper uses cross-state panel and individual data to examine the determinants of informal employment, exploiting the diverging outcomes across states, industries and time. The results suggest that there is no ‘silver bullet’ to combat informality, yet a package of policies promoting labour skills, encouraging foreign investment, enhancing tax enforcement and deterring corruption can reduce informal employment. Intriguingly, reducing the cost to start a business is found to have a non-linear effect on informal employment, conditional on the prevalence of microenterprises.     

技术进步水平与城市学习

经济增长理论认为技术进步是长期经济增长的动力。针对我国地级城市经济增长出现的巨大差异,从全要素生产率的视角,采用Hall和Jone(1999)基于水平增长的人均产出分解,对我国188个地级城市2000年的全要素生产率进行计算,发现全要素生产率较好地解释了我国地级城市人均产出的差异,相关系数达到0.839;然后从我国城市的技术进步主要来自于城市的模仿与学习机会的角度,分析了地级城市全要素生产率差异的原因,提出通过加大吸引外商直接投资力度,发挥城市集聚规模效益,建设学习型城市,促进城市经济的持续增长的建议。     

Informality and Long‐Run Growth

One of the most salient features of developing economies is the existence of a large informal sector. In this paper, we use quantitative theory to study the dynamic implications of informality on wage inequality, human capital accumulation, child labor, and long‐run growth. Our model can generate transitory informality equilibria or informality‐induced poverty traps. Its calibration reveals that the case for the poverty‐trap hypothesis arises: although informality serves to protect low‐skilled workers from extreme poverty in the short run, it prevents income convergence between developed and developing nations in the long run. Then we examine the effectiveness of different development policies to exit the poverty trap. Our numerical experiments show that using means‐tested education subsidies is the most cost‐effective single policy option. However, for longer time horizons, or as the economy gets closer to the poverty trap threshold, combining means‐tested education and wage subsidies is even more effective.