Tax Morale, Entrepreneurship, and the Irregular Economy

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Title:Tax Morale, Entrepreneurship, and the Irregular Economy
Creators:
Lisi, Gaetano
Pugno, Maurizio
Journal or Publication Title:
AUCO Czech Economic Review, 5, 2, pp. 116-131
Uncontrolled Keywords:Entrepreneurship, tax evasion, tax morale, job search theory, irregular/shadow/hidden/underground economy

Abstract

This paper incorporates tax morale into a search and matching model of equilibrium unemployment, with on-the-job search, extended to both the irregular sector and entrepreneurship. Tax morale is modelled as a social norm for tax compliance which renders evasion costly. The moral cost of tax evasion (the strength of the social norm) is negatively related to the fraction of entrepreneurs that evades taxes. Precisely, if the relationship is non-linear, multiple equilibria may emerge, thus accounting for differences in-between regions and countries in the size of the irregular sector. The “good” equilibrium is in fact characterised, with respect to the “bad” one, by a smaller irregular sector and a stronger tax morale.

Official URL: http://www.ceeol.com/aspx/issuedetails.aspx?issueid=F7AA27BA-1FA2-4B2D-80EA-586F10A7D291&articleid=435BBC4F-B503-4005-9E9B-C02557D484A2

Title:Tax Morale, Entrepreneurship, and the Irregular Economy
Creators:
Lisi, Gaetano
Pugno, Maurizio
Uncontrolled Keywords:Entrepreneurship, tax evasion, tax morale, job search theory, irregular/shadow/hidden/underground economy
Subjects:H Social Sciences > HB Economic Theory
H Social Sciences > HG Finance
H Social Sciences > HF Commerce
Divisions:Section of external journals > AUCO Czech Economic Review
Journal or Publication Title:AUCO Czech Economic Review
Volume:5
Number:2
Page Range:pp. 116-131
ISSN:1802-4696
Publisher:Charles University
Related URLs:
URLURL Type
http://auco.cuni.czPublisher
http://avi.lib.cas.cz/node/183Publisher
ID Code:6768
Item Type:Article
Deposited On:29 Aug 2011 19:17
Last Modified:29 Aug 2011 17:17

Citation

Lisi, Gaetano; Pugno, Maurizio (2011) Tax Morale, Entrepreneurship, and the Irregular Economy. AUCO Czech Economic Review, 5 (2). pp. 116-131. ISSN 1802-4696

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