Using Public Information to Estimate Self-Employment Earnings of Informal Suppliers

James Alm () and Brian Erard ()

No 1517, Working Papers from Tulane University, Department of Economics

Abstract: An enduring problem in the analysis of tax evasion is the difficulty of its measurement. An especially troublesome component of tax evasion arises from informal suppliers, such as self- employed domestic workers, street-side vendors, and moonlighting tradesmen. We develop in this paper a new approach for estimating self-employment earnings of informal suppliers. Our methodology involves using national survey results on self-employment earnings within a carefully selected set of industry categories where informal activities are believed to be concentrated. Then, by comparing these national survey results on self-employment earnings to Internal Revenue Service statistics on the amounts actually reported for tax purposes, it is possible to estimate the extent of noncompliance within the selected industry categories. Our methodology relies on survey respondents being reasonably forthcoming about their earnings, which we are able to confirm through some validation exercises.

Keywords: tax evasion; informal suppliers (search for similar items in EconPapers)
JEL-codes: C81 H26 (search for similar items in EconPapers)
Date: 2015-08
New Economics Papers: this item is included in nep-ger, nep-iue and nep-pbe
References: View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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http://repec.tulane.edu/RePEc/pdf/tul1517.pdf First Version, July 2015 (application/pdf)

Related works:
Journal Article: Using Public Information to Estimate Self-Employment Earnings of Informal Suppliers (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:tul:wpaper:1517

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