Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/33150
Authors: 
Barth, Erling
Ognedal, Tone
Year of Publication: 
2005
Series/Report no.: 
IZA Discussion Papers 1893
Abstract: 
Unreported labour by one worker in a firm increases the probability of detection for his fellow workers, not only for himself. The firm takes this external effect into account. As a consequence, unreported work becomes rationed by the firms demand, rather than determined by demand equal supply. The gap between supply and demand increases with firm size. An empirical analysis on survey data supports theses theoretical predictions. Using a bivariate probit model, we find evidence of excess supply of unreported work in firms. We also find that the gap between supply and demand increases with firm size.
Subjects: 
tax evasion
hidden labour market
JEL: 
H26
J20
J22
J23
J24
Document Type: 
Working Paper

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