Abstract

http://ssrn.com/abstract=194628
 
 

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Dodging the Grabbing Hand: The Determinants of Unofficial Activity in 69 Countries


Eric Friedman


Cornell University - Operations Research & Industrial Engineering

Simon Johnson


Massachusetts Institute of Technology (MIT) - Entrepreneurship Center; National Bureau of Economic Research (NBER)

Daniel Kaufmann


The Brookings Institution

Pablo Zoido


Stanford University - Graduate School of Business

August 1999

Conference Paper, The Nobel Symposium in Economics - The Economics of Transition, Stockholm, September 1999

Abstract:     
Across 69 countries, higher tax rates are associated with less unofficial activity as a percent of GDP but corruption is associated with more unofficial activity. Entrepreneurs go underground not to avoid official taxes but to reduce the burden of bureaucracy and corruption. Dodging the Grabbing Hand in this way reduces tax revenues as a percent of both official and total GDP. As a result, corrupt governments become small governments and only relatively uncorrupt governments can sustain high tax rates.

Number of Pages in PDF File: 47

JEL Classification: H26,K42,O17,O1,O17,P5,M5,K0,H0,H1,C42

working papers series


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Date posted: November 17, 1999  

Suggested Citation

Friedman, Eric and Johnson, Simon and Kaufmann, Daniel and Zoido, Pablo, Dodging the Grabbing Hand: The Determinants of Unofficial Activity in 69 Countries (August 1999). Conference Paper, The Nobel Symposium in Economics - The Economics of Transition, Stockholm, September 1999. Available at SSRN: http://ssrn.com/abstract=194628 or http://dx.doi.org/10.2139/ssrn.194628

Contact Information

Eric Friedman
Cornell University - Operations Research & Industrial Engineering ( email )
237 Rhodes Hall
Ithaca, NY 14853
United States
607-255-9130 (Phone)
607-255-9129 (Fax)
Simon Johnson (Contact Author)
Massachusetts Institute of Technology (MIT) - Entrepreneurship Center ( email )
United States
617-253-8412 (Phone)
617-258-6855 (Fax)
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Daniel Kaufmann
The Brookings Institution ( email )
1775 Massachusetts Avenue, NW
Washington, DC 20036
United States
202-797-6257 (Phone)
HOME PAGE: http://www.thekaufmannpost.net
Pablo Zoido
Stanford University - Graduate School of Business ( email )
Stanford, CA 94305
United States
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References:  54
Citations:  154
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