Unreported Labour

Tone Ognedal and Erling Barth

No 28/2005, Memorandum from Oslo University, Department of Economics

Abstract: Unreported labour by one worker in a firm increases the probability of detection for his fellow workers, not only for himself. The firm takes this external effect into account. As a consequence, unreported work becomes rationed by the firms demand, rather than determined by demand equal supply. The gap between supply and demand increases with firm size. An empirical analysis on survey data supports theses theoretical predictions. Using a bivariate probit model, we find evidence of excess supply of unreported work in firms. We also find that the gap between supply and demand increases with firm size.

Keywords: tax evasion; unreported labour (search for similar items in EconPapers)
JEL-codes: H26 J20 J22 J23 J24 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2005-11-10
New Economics Papers: this item is included in nep-pbe and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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