Foreign ownership and labor tax evasion: Evidence from Latvia

Nicolas Gavoille and Anna Zasova

Economics Letters, 2021, vol. 207, issue C

Abstract: This paper shows that in a context of widespread labor tax evasion, employees of foreign-owned firms receive less undeclared cash payments than employees of domestic firms. The empirical analysis relies on a combination of administrative and survey data and implements an expenditure-based underreporting analysis à la Pissarides and Weber (1989). This provides an alternative explanation for the wage premium for employees of foreign-owned firms observed in similar environments.

Keywords: FDI; Tax evasion; Envelope wage; Wage premium (search for similar items in EconPapers)
JEL-codes: E26 H26 H32 O17 O19 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Working Paper: Foreign Ownership and Labor Tax Evasion: Evidence from Latvia (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:207:y:2021:i:c:s0165176521003074

DOI: 10.1016/j.econlet.2021.110030

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