Detecting envelope wages with e-billing information

Andrea Lopez-Luzuriaga, Monica Calijuri (), Carola Pessino (), Simeon Schächtele (), Ubaldo Gonzalez () and Carla Chamorro ()
Additional contact information
Monica Calijuri: Inter-American Development Bank
Carola Pessino: Inter-American Development Bank
Simeon Schächtele: Inter-American Development Bank
Ubaldo Gonzalez: Inter-American Development Bank
Carla Chamorro: Servicio de Rentas Internas Ecuador

International Tax and Public Finance, 2024, vol. 31, issue 1, No 3, 26-65

Abstract: Abstract We use information from the electronic billing system to estimate the underreporting of income of private sector employees. We follow an expenditure-based methodology using the consumption of public and private sector employees for similar levels of reported income. We find that private sector employees underreport between 7 and 9% of their income in Ecuador. The size of the underreporting gap is negatively correlated with the number of employees at the firm, consistent with different risks and administrative costs of ‘envelope wages’ in small versus large firms.

Keywords: Income tax; Evasion; Electronic billing (search for similar items in EconPapers)
JEL-codes: D83 H24 H26 (search for similar items in EconPapers)
Date: 2024
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Working Paper: Detecting Envelope Wages with E-billing Information (2023)
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DOI: 10.1007/s10797-023-09811-y

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