Optimal taxation and monitoring in an economy with matching frictions and underground activities

Gaetano Lisi

Eastern Journal of European Studies, 2011, vol. 2(1), 5-11

Abstract: This short paper shows the interdependence of taxation and monitoring policy in a search and matching model of equilibrium unemployment with an underground sector. More precisely, from a social welfare standpoint, two options are available to the policy maker: she/he may either substitute a tighter monitoring with a higher penalty or enforce both a higher taxation and an increased monitoring.

Keywords: optimal taxation; tax evasion; underground economy; job search theory (search for similar items in EconPapers)
Date: 2011
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Working Paper: Optimal taxation and monitoring in an economy with matching frictions and underground activities (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:jes:journl:y:2011:v:2:p:5-11

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