 An evaluation of the shadow economy in Baltic states: a tax morale perspectiveIoana Horodnic and Colin Williams International Journal of Entrepreneurship and Small Business, 2016, vol. 28, issue 2/3, 339-358 Abstract: To explain the shadow economy in the Baltic states of Estonia, Lithuania and Latvia, this paper evaluates the relationship between the shadow economy and tax morale. Viewing tax morale as a measure of the symmetry between the codified laws and regulations of formal institutions (state morality) and the unwritten socially shared rules of informal institutions (civic morality), the proposition is that the lower the tax morale (i.e., the greater the asymmetry between state morality and civic morality), the greater is the propensity to participate in the shadow economy. To evaluate this, a 2013 survey is reported involving 3,036 face-to-face interviews in these three Baltic nations. Using ordered logistic regression analysis, the finding is that the lower is the tax morale of individuals, population groups and countries, the greater is the propensity to participate in the shadow economy. The paper then explores the implications for theorising and tackling the shadow economy. Keywords: informal economy; undeclared work; tax morale; social contract; institutional analysis; Baltic states; shadow economy; Estonia; Lithuania; Latvia. (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:ids:ijesbu:v:28:y:2016:i:2/3:p:339-358 Access Statistics for this article More articles in International Journal of Entrepreneurship and Small Business from Inderscience Enterprises Ltd |
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