Roberto Dell’Anno

A COMPLEX APPROACH TO ESTIMATE SHADOW ECONOMY: THE STRUCTURAL EQUATION MODELLING.

This article develops some ideas of the application of the “complexity” approach in economics. The complexity approach criticizes the scientific method by distrusting sample reductionism and proposes a multidisciplinary approach. Hence, it abolishes old paradigms by arguing to build up another one with the endowment of greater realism. We argue that one should promote the sharing of knowledge and/or methodologies among disciplines and, for economics, limiting the “autistic” (or autarchy) process, which is critically discussed in economics already. Remembering (1936, p. viii) words, the problem for economics seems to be not so much to develop new ideas but to have the difficulties of “escaping from old ideas” and from “habitual modes of thought and expression”.

Impact of social media on economic growth – evidence from social media

ABSTRACT This article attempts to investigate the impact of social media (SM) on economic growth. Using information obtained from memberships to social networks, we find that SM has a negative and significant impact on economic growth. This provides evidence in favour of our hypothesis that SM increases the search costs for information and also increases the substitution effect from labour to leisure thereby producing a negative impact on growth.

Impacts Of Tax And Firing Costs On Size Of The Informal Sector And Unemployment

Within the literature on the informal sector, there has been numerous research on the impact of labour regulation and the tax rate on productivity on the size of the informal sector (IS) and unemployment. These effects have mostly been analysed with the aid of search and matching models. However, we have observed, that the impact of labour regulation on the size of the informal sector and unemployment rate has not been estimated empirically. On the other hand, the effect of the tax rate on the size of the informal sector has been analysed with the aid of various theoretical and empirical models respectively. Our paper attempts to bridge the gap in the theoretical and empirical literature by demonstrating that a change in firing costs generates a trade off in the decision to operate in the informal sector or become unemployed. However, an increase in the tax rate on production can neutralise the impact of higher firing costs on unemployment. We use a dynamic general equilibrium model to show how a change in firing costs or tax rate affects the incentive of an agent to operate in the informal sector as well as the consequences for unemployment. The model’s parameters are calibrated with values used in the general literature to demonstrate analytically the impact of firing costs and the tax rate on the size of the informal sector and unemployment. Our results show that an increase in firing costs decreases the relative size of the IS but raises the unemployment rate. However, a rise in the tax rate increases the relative size of the informal sector but reduces the unemployment rate. Next, we apply panel data analysis to estimate the effect of firing costs and direct tax for a panel of 93 countries between 2000 and 2007. We find that our empirical results are consistent with the results from our theoretical model. Our results reveals how the kind of regulation (labour or non-labour) can have a direct impact on the mobility of factors of production between the formal and informal sector respectively. It also shows how regulatory policy can be refined to maximize the trade-off between the informal sector and unemployment.