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Under-reporting of Income and Labor Market Performance

Ann-Sofie Kolm and Søren Nielsen

No 2005:5, Research Papers in Economics from Stockholm University, Department of Economics

Abstract: To examine the effects on labor market performance of government tax and enforcement policies, this paper develops an equilibrium model featuring tax evasion, matching frictions, and worker-firm wage bargains. In the wage bargains, workers and firms can agree on the amount of remuneration that should not be reported to the tax authorities. We find that increased taxation actually reduces unemployment, whereas more zealous enforcement has the opposite effect.

Keywords: Unemployment; matching; wage bargaining; tax evasion (search for similar items in EconPapers)
JEL-codes: H26 J41 J64 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2005-06-15
New Economics Papers: this item is included in nep-lab, nep-pbe and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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http://www2.ne.su.se/paper/wp05_05.pdf (application/pdf)

Related works:
Journal Article: Under‐reporting of Income and Labor Market Performance (2008) Downloads
Working Paper: Under-reporting of income and Labour Market Performance (2007) Downloads
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