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The article discusses the effect of bank deregulation on small business. As bank structure restrictions relax there is a tendency for larger banks to expand, partly through the acquisition of smaller banking institutions. These mergers naturally reduce the number of independent banking organizations in states where such acquisitions occur. In the short term it is possible that the consolidations will impose additional costs on some existing customers. Previous research suggests that variations in the banking structure primarily affect the credit conditions of small business. Increased market concentration can lead to higher loan rates for smaller firms.

Informality is widespread in most developing countries. In Latin America, 50% of salaried employees work informally. Three stylized facts characterize informality: (1) small firms tend to operate informally while large firms tend to operate formally; (2) unskilled workers tend to be informal while skilled ones have formal jobs; (3) ceteris paribus, secondary workers (a worker other than the household head) are less likely to operate formally than primary workers. We develop a model that accounts for all these facts. In our model, both heterogeneous firms and workers have preferences over the sector they operate and choose optimally whether to function formally or informally. There are two labor markets, one formal and the other informal, and both firms and workers act unconstrained in them. By contrast, a prominent feature of the preexisting literature is that workers' decisions play no role in determining the equilibrium of the economy. In our model, policies that reduce the supply of workers in the informal labor market at given wages will increase the level of formality in the economy. This has noteworthy implications for the design of social programs in developing countries. We also show that an increase in the participation of secondary workers would tend to raise the level of informality in the economy. ( JEL J24, J33) [ABSTRACT FROM AUTHOR]

This article develops a simple framework for analyzing the links between corruption and the unofficial economy and their implications for the official economy. In a model of self-selection with heterogeneous entrepreneurs, we show that the entrepreneurs' option to flee to the underground economy constrains a corrupt official's ability to introduce distortions to the economy for private gains. The unofficial economy thus mitigates government-induced distortions and, as a result, leads to enhanced economic activities in the official sector. In this sense, the presence of the unofficial sector acts as a complement to the official economy instead of as a substitute. [ABSTRACT FROM AUTHOR]

The minimum wage (MW) can improve the position of disadvantaged groups by reducing the incidence of low pay and promoting pay equality. Some relevant contentious questions of policy are summarized here: issues concerning coverage (which sectors included/excluded, the preponderance of the low-paid in sectors where workers are poorly represented and organized, the relevance of a MW in the informal sector); the controversy surrounding the impact of the MW on employment, notably whether it has greater impact on the composition than on the level of employment; and causal factors in the male/female wage gap. [ABSTRACT FROM AUTHOR]

Examines the role, sources and effects of private protection organizations, also known as rackets, using a survey of 240 small businesses in Russia and Poland. Service other than protection against rival protection organizations; Link between disorganized government regulation and informal economic activity; Protection of renovated shops.

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Focuses on results of surveys regarding the subterranean economy of the Unites States. Estimate of the size of the U.S. subterranean economy; Sources of income of the subterranean economy; Mode by which the subterranean economy for 1976 was estimated; Size of the subterranean economy according to the U.S. Internal Revenue Service; Groups which comprise the subterranean labor force. INSETS: Sweet Discretion;Pennies From Heaven;DOUBLESPEAK AWARD;Subterranean Corporation