Envelope wages, hidden production and labor productivity

Di Nola, Alessandro; Kocharkov, Georgi; Vasilev, Aleksandar

Envelope wages, hidden production and labor productivity

Dateien

Di Nola_2-hr1rnanj6jz22.pdfGröße: 2.32 MBDownloads: 357

Datum

2019

Autor:innen

Di Nola, Alessandro

Kocharkov, Georgi

Vasilev, Aleksandar

Open Access-Veröffentlichung

Open Access Green

Sammlungen

Wirtschaftswissenschaften

Publikationstyp

Zeitschriftenartikel

Publikationsstatus

Published

Erschienen in

The B.E. Journal of Macroeconomics. 2019, 19(2), 20180252. ISSN 1534-6005. eISSN 1935-1690. Available under: doi: 10.1515/bejm-2018-0252

Zusammenfassung

We evaluate the relative importance of aggregate labor productivity versus income taxes and social contributions for tax compliance in an economy with a large degree of informality. Empirical evidence points out that tax evasion in Europe happens through partially concealing wages and profits in formally registered enterprises. To this end, we build a model in which employer-employee pairs of heterogeneous productive capacities make joint decisions on the degree of tax evasion. The quantitative model is used to analyze the case of Bulgaria which has the largest informal economy in Europe and underwent a number of important tax reforms over the period 2000–2014, including the introduction of a flat income tax in 2008. The estimation strategy relies on matching the empirical series for the size of the informal economy and other aggregate outcomes for 2000–2014. Our counterfactual experiments show that the most important factor for the changing size of the informal economy is labor productivity, which accounts for more than 75% of the change. The variation in corporate income tax accounts for the rest. We find that the 2008 flat tax reform did not play any visible role in coping with informality.

Fachgebiet (DDC)

330 Wirtschaft

Schlagwörter

envelope wages, flat tax reform, hidden production, informal economy

Zitieren

ISO 690

DI NOLA, Alessandro, Georgi KOCHARKOV, Aleksandar VASILEV, 2019. Envelope wages, hidden production and labor productivity. In: The B.E. Journal of Macroeconomics. 2019, 19(2), 20180252. ISSN 1534-6005. eISSN 1935-1690. Available under: doi: 10.1515/bejm-2018-0252

BibTex

@article{DiNola2019-06-26Envel-46470,
  year={2019},
  doi={10.1515/bejm-2018-0252},
  title={Envelope wages, hidden production and labor productivity},
  number={2},
  volume={19},
  issn={1534-6005},
  journal={The B.E. Journal of Macroeconomics},
  author={Di Nola, Alessandro and Kocharkov, Georgi and Vasilev, Aleksandar},
  note={Article Number: 20180252}
}

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