The economic consequences of population and urbanization growth in Italy: from the 13th century to 1900. A discussion on the Malthusian dynamics

In this paper we investigate the quantitative relation between population, real wages and urbanization in the Italian economy during the period 1320-1870. In this period the prevailing conditions were those of a poor, mainly agricultural economy with limited human capital and rudimentary technology. However, these centuries witnessed the considerable growth of urban centers, which was not only a significant demographic phenomenon in itself. The multiplication of such agglomerations had a striking influence on mortality and hence on the general course of the economy in this period. We present two main results i) the positive check is strong and statistically significant and it explains an important part of the dynamic of mortality but the other equilibrating mechanism in the Malthusian model -the preventive check- based on the positive relationship between fertility and real wages does not operate; ii) the urbanization process and the flows of rural immigrants which fuelled it, had profound, complex implications on productivity in agriculture and on wages and population dynamics.Malthusian dynamics, Urbanization, Pre-industrial labor productivity, Poulation trend, Demographic changes.

Market Consumption and Hidden Consumption: A Test for Substitutability

In this paper we perform an empirical analysis on the relationship between private consumption and underground economy for the Italian case. We find that private market consumption and underground (or hidden) consumption may be defined as ”complementary goods”: an increase in underground consumption tends to rise family market consumption and increase its marginal utility. An implication of this result is that the nonmarket sector does not offer hedging opportunities to the consumer-worker as stressed in Busato and Chiarini (2002) artificial economy. Moreover, wealth effects associated with a change in underground consumption are negative. A statistical model confirms this structural interpretation.-

Discretionary policy, strategic complementarity and tax evasion. A strategic analysis of the Italian audit mechanism

Underlying this work is the idea that there is a problem of strategic complementarity of individuals who choose to evade. Complementarity results from the discretionary policies of governments and the strategic implications of the Studi di Settore (Sector Studies), the mechanism used in Italy to evaluate the income (in reality, the turnover) of professional categories and small firms. In the Italian case, policy discretion and the Sector Studies lead to a failure of the coordination mechanism of taxpayers and confer a strong advantage for the coordination mechanism of tax evaders. The outcome is a coordination failure where individuals converge to the least efficient equilibrium from a social perspective.Tax Evasion; Tax Compliance; Audit Selection Mechanism; Complementarity.

Steady state Laffer curve with the underground economy

This paper studies equilibrium effects of fiscal policy within a dynamic general equilibrium model where tax evasion and underground activities are explicitly incorporated. In particular, we show that a dynamic general equilibrium with tax evasion may give a rational justification for a variant of the Laffer curve for a plausible parameterization. In this respect, the paper also identifies the different parameterization of the model formulation with tax evasion under which a Laffer curve exist. From a revenue maximizing perspective, the key policy messages are that bringing tax payers to compliance would be better than announcing to punish them if convicted, and that an economy without problems of compliance is much more sensitive to myopic behavior.Two-sector Dynamic General Equilibrium Models, Fiscal Policy, Tax Evasion and Underground Activities.

Structural and Cyclical Patterns of Underground Labour Input in Italy from 1980 to 2004

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MARKET COMSUMPTION AND HIDDEN CONSUMPTION. A TEST FOR SUBSTITUTABILITY

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CONSUMPTION AND INCOME SMOOTHING

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Consumption and Income Smoothing

This paper presents a two sector dynamic general equilibrium model in which income smoothing takes place within the households (intra-temporally), and consumption smoothing takes place among the households (inter-temporally). Idiosyncratic risk sharing within the family is based on an income smoothing contract. There are two sectors in the model, the regular sector and the underground sector, and the smoothing comes from the underground sector, which is countercyclical with respect aggregate GDP. The paper shows that the simulated disaggregated consumption and income series (that are the regular and underground consumption flows) are more sensitive to exogenous changes in sector-specific productivity and tax rates than regular and underground income flows, and that this picture is reversed when the aggregate series are considered.-

Moonlighting Production, Tax Rates and Capital Subsidies

Informal firms play a crucial role in both developing and developed countries, and there is evidence of a larger presence of moonlighting firms over ghost firms. The former are firms that operate simultaneously in the official and unofficial sectors, whereas the ghost firms undertake their production only underground. In order to deal with this evidence, through an ad-hoc assumption we represent a specific technological advantage of moonlighting firms over ghost firms, modelled through an aggregate-capital externality. In this setting we examine the steady state effect of fiscal policies aimed to support firms, in particular investment subsidies and tax allowances, on firm size and underground production. Among the main results, a tax cut (rise), induces the moonlighting firm to engage in more (less) official production. Contrary to the presumption that subsidies may also be useful for pushing firms to operate over ground, in the presence of moonlighting technology, the incentives to improve capital stock turn out to be counterproductive in that they increase the unofficial economy overall.formal and informal sectors, capital investment, tax exemptions