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The Informal Economy: Who Wins, Who Loses and Why We Care
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Giovanna Maria Dora Dore, World Economics, March 2019
The informal economy is one of the most complex economic and political phenomena of our time. It exists in rich and poor countries alike, and currently employs almost half of the world’s workers, about 1.8 billion people. •At a value of US$10 trillion, the informal economy is the second-largest economy in the world, after the economy of the United States (at US$14 trillion) and before that of China (at US$8.2 trillion). High taxes, labour costs and social security infrastructures, undeclared work and underreporting are among the most powerful drivers of informality. Measures promoting behavioural changes can help counter its growth, even though controls and penalties remain more popular as tools in the fight against the informal economy. The informal sector remains the fastest-growing part of the world economy and we need a better understanding of what it means for business and society and why it is the preferred operating sector for many entrepreneurs.
Demographic Change Across the Globe
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Marga Peeters & Loek Groot, World Economics, June 2012
This paper investigates the fiscal pressure, or the level of public expenditure on old and young economically inactive people, arising from demographic change in relation to the labour market space, or the proportion of the working age population not in full-time employment. The exercise is carried out for 50 countries that cover 75% of the world population. The pressure-to-space indicator ranks Poland, Turkey and Greece high, although, apart from Turkey and India, developing countries generally rank low due to low spending on the old (pensions, healthcare) and on the young (education, family costs). Peculiarly, economies with higher pressure have more space. The hypothesis that ageing economies have started using their labour market space in anticipation of higher demographic pressure is rejected. It is important to note that raising the retirement age in developed economies by five years alleviates fiscal pressure by almost 30% and creates 10% more labour market space.
The Shadow Economy Labour Force
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Friedrich Schneider, World Economics, December 2011
In this paper, the main focus lies on the development and size of the shadow economy labour force in OECD, developing and transition countries. Besides informal employment in the rural and non-rural sector, other measures of informal employment like the share of employees not covered by social security, own account workers or unpaid family workers are also shown. The most influential factors on the shadow labour force are tax policies and state regulation, which, if they rise, increase both. Furthermore the discussion of the recent literature underlines that economic opportunities, the overall situation on the labour market and unemployment are crucial for an understanding of the dynamics of the shadow economy and especially the shadow labour force.
What Do We Know About the Shadow Economy?
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Friedrich Schneider, World Economics, December 2001
Estimates of the size of the shadow economy in 21 OECD countries are presented. The average size of the shadow economy (as a percentage of ‘official’ GDP) over 1999/2000 in these countries is 16.7%. The author concludes that it is the increasing burden of taxation and social security contributions, combined with rising state regulatory activities, that are the driving forces for the recent growth in size of the shadow economy in the countries concerned.
The Black Economy - Benefit frauds or tax evaders?
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Jim Thomas, World Economics, March 2000
One answer to the question "How Rich are We?" is to compare levels of National Income either across countries or for a single country over time. However, the relevance of this approach depends on how accurately National Income measures the output of goods and services of a country. While it is difficult to measure, the Black Economy represents the output of goods and services that is not generally captured in the National Income Accounts. This article discusses the problems of measuring the size of the Black Economy and speculates on the questions of who is involved and how. The relative importance of Tax Evasion versus Benefit Fraud is discussed.



Displaying: 1-5 of 5