Explaining the Prevalence of the Informal Economy in the Baltics: an Institutional Asymmetry Perspective

Williams, Colin C.; Horodnic, Ioana Alexandra

doi:10.1515/esrp-2015-0029

Cited by 13 publications

(4 citation statements)

References 40 publications

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“…Societies often have established laws and regulations and formal institutions that provide the legal rules of the game (Williams and Horodnic 2015). However, societies also have unwritten shared rules that are created and enforced outside the officially accepted channels as an informal institution (Helmke and Levitsky 2004).…”

Section: Conceptual Frameworkmentioning

confidence: 99%

The Perceived Impact of Public Sector Corruption on Economic Performance of Micro, Small, and Medium Enterprises in a Developing Country

2019

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Micro, small, and medium enterprises (MSMEs) contribute to the economic development of most developing countries. However, the economic performance of the MSMEs is often restricted by several obstacles. This paper reports on a study of the impacts of public sector corruption on employment growth in MSMEs, as perceived by their managers/owners. The data originated from a nationwide survey that involved MSMEs managers/owners in Papua New Guinea (PNG) that were selected by a stratified random sampling technic. The data was analyzed using a two-stage least squares (2SLS) regression model. The results show that MSME managers/owners perceive that corruption in the public sector is generally linked to an increase in employment growth in their firms. Medium-size enterprises benefit most from corruption in the public sector, whereas small-size firms appear not to benefit. The findings indicate that other than corruption, there might be failures in the public institutions that are hampering the competitiveness, innovations and efficiency in MSMEs. Corrupt practices can precipitate the loss of revenue that would have accrued to the government from tax that could be used to provide facilities required by the public institutions. Corruption in the public institutions of developing countries such as PNG can be tackled by implementing strategies that promote zero-tolerance for corruption. These include promoting public awareness of the cost of corruption to the country’s economy, improvement in the quality of governance, and expanding the capacity of government agencies for effective and efficient service delivery. Increasing the penalty for engaging in corrupt practices could also be considered, while people who engage in practices that discourage corruption should be rewarded. The findings contribute to a potential strategy that could be used to promote ease of doing business in a country by considering the obstacles that MSMEs face.

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Section: Conceptual Frameworkmentioning

confidence: 99%

The Perceived Impact of Public Sector Corruption on Economic Performance of Micro, Small, and Medium Enterprises in a Developing Country

2019

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“…To tackle informal payments therefore, it will be necessary to address this institutional asymmetry. This requires changes in on the one hand, the personal norms that constitute the informal institutions [14,[51][52][53] but also the formal institutions [14,54,55]. To change the personal norms that view informal practices as acceptable (i.e., the informal institutions), three policy initiatives are required.…”

Section: Discussionmentioning

confidence: 99%

The Companion Pandemic to COVID-19: The Use of Informal Practices to Access Public Healthcare Services in the European Union

Horodnic¹,

Williams²,

Drugă³

2022

Int J Public Health

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Objectives: The objective of this paper is to evaluate the use of informal payments and personal connections to gain preferential access to public health services during the COVID-19 pandemic and to propose effective policy measures for tackling this phenomenon.Methods: Using data from 25,744 patients in the European Union, six different scenarios are analyzed in relation to making informal payments and/or relying on personal connections to access public healthcare services. To evaluate the propensity to engage in informal practices in healthcare, probit regressions with sample selection and predicted probabilities are used. Robustness checks are also performed to test the reliability of the findings.Results: For each scenario, a statistically significant association is revealed between the propensity to make informal payments and/or rely on personal connections and the asymmetry between the formal rules and the patients’ personal norms and trust in public authorities.Conclusion: To tackle informal practices in healthcare, policy measures are required to reduce the asymmetry between the formal rules and personal norms by raising trust in public authorities.

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“…Hungary, having a large informal economy as big as 23.3% of its GDP, provides enough incentives for the population to respond more to tax rate changes, compared to both Estonia and Bulgaria where the informal economies are smaller [8]. Estonia only has an informal economy the size of 15.7% of its GDP, while Bulgaria has successfully shrunk its informal economy by two-thirds [9,10]. Therefore, when the income tax rate decreases, there is much more movement from the informal economy to the formal one in Hungary, when tax evasion diminishes.…”

Section: Case Analysismentioning

confidence: 99%

Evaluating the Veracity of the Laffer Curve in Flat-Income-Tax Economies

2024

HBEM

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The Laffer Curve is a concept that postulates a concave downward curve, representing the relationship between a country’s tax rates and tax revenue. This theory proposes that an increase in tax rates would initially raise the government’s tax revenue to a certain threshold, and further hikes in tax rates beyond this threshold would result in a decline in total tax revenue. This paper aims to empirically evaluate the validity of the Laffer Curve theory within nations with a flat income tax system. By establishing a quadratic model accounting for the changes in income tax rates and tax revenue of eleven nations, this paper has found that only one of them verifies the Laffer Curve theory. The discrepancy is further analyzed, and the limitations of the model are identified, with further research suggestions in later sections.

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Explaining the Prevalence of the Informal Economy in the Baltics: an Institutional Asymmetry Perspective

Cited by 13 publications

References 40 publications

The Perceived Impact of Public Sector Corruption on Economic Performance of Micro, Small, and Medium Enterprises in a Developing Country

The Perceived Impact of Public Sector Corruption on Economic Performance of Micro, Small, and Medium Enterprises in a Developing Country

The Companion Pandemic to COVID-19: The Use of Informal Practices to Access Public Healthcare Services in the European Union

Evaluating the Veracity of the Laffer Curve in Flat-Income-Tax Economies

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