The Implication of Efficiency Wages On Tax Evasion and Tax Collections

Wen-Ya Chang and Ching-chong Lai
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Wen-Ya Chang: Fu-Jen Catholic University

Public Finance Review, 1996, vol. 24, issue 2, 163-172

Abstract: The conclusion of Peacock and Shaw's 1982 article "Tax Evasion and Tax Revenue Loss," which has received wide attention in the literature, indicates that a rise in tax evasion will definitely lead to lower tax collections. The present article makes a new attempt to reexamine the Peacock and Shaw proposition by introducing the principal tenets of the efficiency wage hypothesis. It is found that, in a context of efficiency wage model, a rise in the degree of tax evasion may enhance total tax collections rather than depress them.

Date: 1996
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Persistent link: https://EconPapers.repec.org/RePEc:sae:pubfin:v:24:y:1996:i:2:p:163-172

DOI: 10.1177/109114219602400203

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