TY  - RPRT
AV  - public
TI  - The ?emersion? effect: an ex post and ex ante social program evaluation on labor tax evasion in Italy
Y1  - 2013/06//
KW  - Labor tax evasion
KW  -  temporary contracts
KW  -  firing costs
KW  -  search frictions
KW  -  policy evaluation. - JEL Classification: J38
KW  -  J63
KW  -  J64
KW  -  H26
UR  - http://eprints.imtlucca.it/1623/
A1  - Di Porto, Edoardo
A1  - Elia, Leandro
A1  - Tealdi, Cristina
PB  - IMT Institute for Advanced Studies Lucca
SN  - 2279-6894
M1  - imt_eic_working_paper
N2  - We analyze how different policy interventions may incentive the transition of workers from the informal to the formal sector. We use Italian data over the period 1998-2008 to evaluate ex post whether the 2003 Italian labor market reform was able to reach the objective to reduce the share of shadow employment. Based on our empirical results, we develop an ex ante evaluation based on a search and matching model, á la Mortensen and Pissarides to determine the right combination of policy interventions which may be effective in generating a significant reduction in undeclared work together with an expansion of the formal sector. We find that in an economy where permanent and temporary contracts coexist, the combination of lower payroll taxes for permanent jobs and higher probability of being audited generates a compression of the informal sector, leaving unemployment unchanged. A similar result can be obtained through a reduction of the firing cost associated with permanent jobs, even though this causes temporary contracts to increase relatively more than permanent contracts.
ID  - eprints1623
EP  - 44
ER  -