Is Environmental Income Reporting Evasive in Household Surveys? Evidence from Rural Poor in Laos

41 Pages Posted: 5 Aug 2017

See all articles by Trung Thanh Nguyen

Trung Thanh Nguyen

Leibniz Universit├Ąt Hannover

Priyanka Parvathi

University of Hanover

Date Written: July 10, 2017

Abstract

Literature has consistently reiterated that the self-employed non-poor underreport their business income to tax authorities and in household surveys. In this work, we measure the extent to which poor households engaging in illegal environmental activities underreport income in Laos. We use a two year panel data and apply the Engel curve to detect and estimate the reporting gap. We further use a switching probit regression to identify the factors of income underreporting and its impact on income poverty outcomes. Results show that on an average, rural households who earn at least a quarter of their income from the environment underreport by over 50% in household surveys resulting in overestimation of income poverty. Moreover, we find that a perceived threat to food security drives rural poor to engage in illegal environmental extraction.

Keywords: Engel Curve, Income Underreporting, Household Surveys, Poverty, Switching Probit Model

Suggested Citation

Nguyen, Trung Thanh and Parvathi, Priyanka, Is Environmental Income Reporting Evasive in Household Surveys? Evidence from Rural Poor in Laos (July 10, 2017). Ecological Economics, Volume 143, Pages 218-226, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3009614 or http://dx.doi.org/10.2139/ssrn.3009614

Trung Thanh Nguyen (Contact Author)

Leibniz Universit├Ąt Hannover ( email )

Welfengarten 1
D-30167 Hannover, 30167
Germany

Priyanka Parvathi

University of Hanover ( email )

Germany

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