Limits to third-party reporting: Evidence from a randomized field experiment in Norway

Marie Bjørneby, Annette Alstadsæter and Kjetil Telle

Journal of Public Economics, 2021, vol. 203, issue C

Abstract: Third-party reporting and employers’ tax withholding are powerful compliance mechanisms, as long as the employer and employee do not collude to evade. In cooperation with the Norwegian Tax Administration we designed a randomized field experiment with unannounced on-site audits. Matching audit data to administrative registers, we provide evidence of collusive tax evasion. We find that firms assigned to be audited increased their subsequent wage reporting on behalf of their employees by 18 percent relative to firms assigned to the control group. The effect is more pronounced among small firms with few employees. Our results document limitations of third-party reporting, but also that these limitations can be counteracted by minor on-site audits.

Keywords: Collaborative tax evasion; Collusive tax evasion; Random audits; Undeclared work; Third-party reporting (search for similar items in EconPapers)
JEL-codes: E26 H26 H32 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:pubeco:v:203:y:2021:i:c:s0047272721001481

DOI: 10.1016/j.jpubeco.2021.104512

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