Undeclared Work, Employer Tax Compliance, and Audits

Edoardo Di Porto

Public Finance Review, 2011, vol. 39, issue 1, 75-102

Abstract: This article analyzes employer labor tax evasion and the impact on this evasion of tax inspections by a labor inspectorate. The analysis is based on a unique data set built by linking two sources of information: a data set of individual artisan firms and an individual audit data set. Our data describe the universe of artisan firms in Piedmont (Italy) in 2000 to 2005. Using information on firm characteristics and tax evasion observed directly from the audit exercise, we estimate undeclared work in the artisan sector, and we then evaluate the impact of tax inspections on employer labor tax declarations. We find that inspections could actually be counterproductive, decreasing both tax compliance and tax revenues.

Keywords: undeclared work; tax compliance; audits; double-hurdle model; difference-in-difference estimation (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:sae:pubfin:v:39:y:2011:i:1:p:75-102

DOI: 10.1177/1091142110381641

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