Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/215004 
Year of Publication: 
2019
Series/Report no.: 
CESifo Working Paper No. 8002
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
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.
Subjects: 
economic development
firm productivity
tax evasion
JEL: 
D20
H26
O47
Document Type: 
Working Paper
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