Shadow economy, tax morale, governance and institutional quality: A panel analysis

Friedrich Schneider () and Benno Torgler ()
Additional contact information
Benno Torgler: University of California, Berkeley, School of Law

No 2007-01, Economics working papers from Department of Economics, Johannes Kepler University Linz, Austria

Abstract: This paper analyses how governance or institutional quality and tax morale affect the shadow economy, using an international country panel and also within country data. The literature strongly emphasizes the quantitative importance of these factors to understand the level and changes of shadow economy. However, the limited number of investigations use cross-sectional country data with a relatively small number of observations, and hardly any paper has investigated tax morale and provides evidence using within country data. Using more than 25 proxies that measure governance and institutional quality we find strong support that its increase leads to a smaller shadow economy. Moreover, an increase in tax morale reduces the size of the shadow economy.

Keywords: Shadow economy; tax morale; governance quality; government intervention; corruption (search for similar items in EconPapers)
JEL-codes: D73 D78 H2 H26 O17 O5 (search for similar items in EconPapers)
Date: 2007-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (130)

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http://www.econ.jku.at/papers/2007/wp0701.pdf (application/pdf)

Related works:
Working Paper: Shadow Economy, Tax Morale, Governance and Institutional Quality: A Panel Analysis (2007)
Working Paper: Shadow Economy, Tax Morale, Governance and Institutional Quality: A Panel Analysis (2007)
Working Paper: Shadow Economy, Tax Morale, Governance and Institutional Quality: A Panel Analysis (2007)
Working Paper: Shadow Economy, Tax Morale, Governance and Institutional Quality: A Panel Analysis (2007)
Working Paper: Shadow Economy, Tax Morale, Governance and Institutional Quality: A Panel Analysis (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:jku:econwp:2007_01

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