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Coming Closer? Tax Morale, Deterrence and Social Learning after German Unification

Lars Feld, Benno Torgler and Bin Dong

CREMA Working Paper Series from Center for Research in Economics, Management and the Arts (CREMA)

Abstract: The paper explores whether a social learning model helps explain the observed conformity and compliance with social norms after the unification of Germany. We compare tax morale, (the willingness to pay taxes), between inhabitants of East and West Germany during the post-unification period, using three World Values Survey/European Values Survey waves between 1990 and 1999. German unification is of particular interest in analyzing tax morale since it is close to a quasi-natural experiment. Factors such as a common language, similar education systems and a shared cultural and political history prior to the separation after the Second World War can be controlled because they are similar. Our findings indicate that the social learning model employed in this study helps to predict the development of tax morale over time. It is clear that tax morale values converged within a mere nine years after unification, due largely to a strong change in the level of tax morale in the East. Thus, the paper contributes to the literature that attempts to explain how norms arise, how they are maintained and how they are changed.

Keywords: Tax Morale; Social Learning; Conformity; Convergence Process; Deterrence; Quasi-Natural Experiment (search for similar items in EconPapers)
JEL-codes: C93 D78 H26 H73 (search for similar items in EconPapers)
Date: 2008-04
New Economics Papers: this item is included in nep-acc, nep-eec, nep-pbe and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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