Unemployment, tax evasion and the "slippery slope" framework

Gaetano Lisi

MPRA Paper from University Library of Munich, Germany

Abstract: The proposed theoretical work introduces the basic insights of the ‘slippery slope’ framework into the benchmark macroeconomic model of the labour market in order to study the relation between tax compliance (both voluntary and enforced), tax evasion and unemployment. This paper shows that the firm's decision to evade taxes also depends on trust in tax authorities, and affects one of the most important macroeconomic variables: the unemployment rate. Also, the model is able to mimic the crucial interaction between trust and power and its effects on voluntary and enforced compliance. The main result is that with the “right mix” of policy tools of deterrence, trust in tax authorities is maximised, (voluntary) tax compliance increases and a reduction of tax evasion may decrease unemployment.

Keywords: tax evasion; tax compliance; trust and power; unemployment (search for similar items in EconPapers)
JEL-codes: H26 J64 K42 (search for similar items in EconPapers)
Date: 2012-03-18
New Economics Papers: this item is included in nep-iue and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Related works:
Journal Article: Unemployment, tax evasion and the slippery slope framework (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:37433

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