Table of contents alert
Do you want to receive an email alert about new issue?

CEEOL DigLib DOAJ EBSCO EconBiz EconLit RePEc Scopus Socolar JournalGuide
Total downloads:648389
Total abstract views:908150

Volume 5, Issue 2


Tax Morale, Entrepreneurship, and the Irregular Economy

Lisi, Gaetano; Pugno, Maurizio

Year: 2011   Volume: 5   Issue: 2   Pages: 116-131

Abstract: This paper incorporates tax morale into a search and matching model of equilibrium unemployment, with on-the-job search, extended to both the irregular sector and entrepreneurship. Tax morale is modelled as a social norm for tax compliance which renders evasion costly. The moral cost of tax evasion (the strength of the social norm) is negatively related to the fraction of entrepreneurs that evades taxes. Precisely, if the relationship is non-linear, multiple equilibria may emerge, thus accounting for differences in-between regions and countries in the size of the irregular sector. The “good” equilibrium is in fact characterised, with respect to the “bad” one, by a smaller irregular sector and a stronger tax morale.

JEL classification: E26, H26, J64, L26, K42

Keywords: Entrepreneurship, tax evasion, tax morale, job search theory, irregular/shadow/hidden/ underground economy

RePEc: http://ideas.repec.org/a/fau/aucocz/au2011_116.html

pdf [PDF] print Print   Recommend to others Recommend to others