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Anti-tax evasion, anti-corruption and public good provision: An experimental analysis of policy spillovers

Ritwik Banerjee, Amadou Boly and Robert Gillanders

Journal of Economic Behavior & Organization, 2022, vol. 197, issue C, 179-194

Abstract: Our framed laboratory experiment analyses the causal relationship between corruption and tax evasion and explores whether deterring one may have desirable spill over effects on the other. We find that the possibility of corruption causally increases tax evasion. The data offers weak evidence that tax evasion leads to more corruption. Introducing a policy to detect and punish public officials who embezzle from tax revenues significantly reduces tax evasion on the part of citizens. However, auditing and punishing tax-evading citizens do not deter embezzlement on the part of public officials. The public good provision increases in all deterrence treatments compared to a baseline, with a “Big bang” treatment in which both tax evasion and corruption are liable to be detected and punished being the most effective. A standalone anti-corruption monitoring and punishment strategy is the next most effective policy followed by tax auditing. Thus, when faced with two “evils” regarding the public good provision, allocating more resources to fight corruption may be a better policy response.

Keywords: Corruption; Tax evasion; Deterrence; Public good; Lab experiment (search for similar items in EconPapers)
JEL-codes: C92 D73 H26 H41 H83 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1016/j.jebo.2022.03.006

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Journal of Economic Behavior & Organization is currently edited by Houser, D. and Puzzello, D.

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Handle: RePEc:eee:jeborg:v:197:y:2022:i:c:p:179-194