Productivity and Tax Evasion

45 Pages Posted: 12 Jan 2020

See all articles by Era Dabla-Norris

Era Dabla-Norris

International Monetary Fund (IMF)

Mark Gradstein

Ben-Gurion University of the Negev - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute); Centre for Economic Policy Research (CEPR); World Bank - Development Research Group (DECRG)

Fedor Miryugin

International Monetary Fund (IMF)

Florian Misch

ZEW – Leibniz Centre for European Economic Research

Date Written: 2019

Abstract

The extent of tax compliance has important implications for revenue yield, efficiency and the fairness of any tax system. Tax evasion undermines revenue collection, distorts competition, and undermines a country's development prospects. In this paper, we investigate whether higher productivity causally leads to lower tax evasion. We first present stylized facts consistent with this view and develop a model that illustrates one potential transmission channel. Second, we test the model predictions at the firm level using the self-reported share of declared income as proxy for tax evasion for a large sample of emerging and developing economies. Our results suggests that productivity improvements by firms can lead to lower tax evasion.

Keywords: economic development, firm productivity, tax evasion

JEL Classification: D200, H260, O470

Suggested Citation

Dabla-Norris, Era and Gradstein, Mark and Miryugin, Fedor and Misch, Florian, Productivity and Tax Evasion (2019). CESifo Working Paper No. 8002. Available at SSRN: https://ssrn.com/abstract=3517049

Era Dabla-Norris (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Mark Gradstein

Ben-Gurion University of the Negev - Department of Economics ( email )

Beer-Sheva 84105
Israel
+97 2 8647 2288 (Phone)
+97 2 8647 2941 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.cesifo.de

Centre for Economic Policy Research (CEPR)

London
United Kingdom

World Bank - Development Research Group (DECRG)

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States

Fedor Miryugin

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Florian Misch

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
16
Abstract Views
59
PlumX Metrics