Dodging the Grabbing Hand: The Determinants of Unofficial Activity in 69 Countries
Posted: 2 Sep 2001
There are 2 versions of this paper
Dodging the Grabbing Hand: The Determinants of Unofficial Activity in 69 Countries
Conference Paper, The Nobel Symposium in Economics - The Economics of Transition, Stockholm, September 1999
Number of pages: 47
Posted: 17 Nov 1999
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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.
JEL Classification: H26,K42,O17,O1,O17,P5,M5,K0,H0,H1,C42
Suggested Citation: 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. Journal of Public Economics, Vol. 76, No. 3. Available at SSRN: https://ssrn.com/abstract=281619
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