Universität zu Köln

Doerrenberg, Philipp and Duncan, Denvil (2014). Experimental evidence on the relationship between tax evasion opportunities and labor supply. Eur. Econ. Rev., 68. S. 48 - 71. AMSTERDAM: ELSEVIER SCIENCE BV. ISSN 1873-572X

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Abstract

Motivated by the observation that access to evasion opportunities is distributed heterogeneously across the labor market, this paper examines the extent to which labor supply elasticities with respect to tax rates depend on such evasion opportunities. We first discuss the channels through which access to evasion affects labor supply responses and then set up a laboratory experiment (N=205) in which all participants undertake a real-effort task over several rounds. Subjects face a tax rate that varies across rounds and are required to pay taxes on earned income. The treatment group is given the opportunity to underreport income, while the control group is not. We find evidence that participants in the treatment group respond differently to changes in the net-of-tax rate than participants in the control group. The effect is more prevalent when tax rates fall. Additionally, the direction of the treatment effect is dependent on the evolution of tax rates across rounds. (C) 2014 Elsevier B.V. All rights reserved.

Item Type:	Journal Article
Creators:	Creators Email ORCID ORCID Put Code Doerrenberg, Philipp UNSPECIFIED UNSPECIFIED UNSPECIFIED Duncan, Denvil UNSPECIFIED UNSPECIFIED UNSPECIFIED
URN:	urn:nbn:de:hbz:38-439965
DOI:	10.1016/j.euroecorev.2014.02.005
Journal or Publication Title:	Eur. Econ. Rev.
Volume:	68
Page Range:	S. 48 - 71
Date:	2014
Publisher:	ELSEVIER SCIENCE BV
Place of Publication:	AMSTERDAM
ISSN:	1873-572X
Language:	English
Faculty:	Unspecified
Divisions:	Unspecified
Subjects:	no entry
Uncontrolled Keywords:	Keywords Language SOCIAL PREFERENCES; TAXABLE INCOME; MODEL; UNCERTAINTY; KNOWLEDGE; ILLUSION; MORALE; MARKET; WORK Multiple languages Economics Multiple languages
URI:	http://kups.ub.uni-koeln.de/id/eprint/43996