TY - JOUR
T1 - Tax evasion and income source
T2 - A comparative experimental study
AU - Gërxhani, Klarita
AU - Schram, Arthur
PY - 2006/6
Y1 - 2006/6
N2 - We compare tax evasive behavior in a country in transition from communism to that in a developed economy by running an experiment across distinct social groups in Albania and the Netherlands. Aside from the tax compliance decision, subjects choose a source of income, where one type enables subsequent tax evasion. We show that they take the possibility of evasion into account when deciding on the income source. This yields potential allocative inefficiency in the labor market. In addition, Dutch subjects evade more than the Albanians. We argue that the different levels of tax evasion outside of the laboratory in the two types of countries can be attributed to distinct formal tax institutions.
AB - We compare tax evasive behavior in a country in transition from communism to that in a developed economy by running an experiment across distinct social groups in Albania and the Netherlands. Aside from the tax compliance decision, subjects choose a source of income, where one type enables subsequent tax evasion. We show that they take the possibility of evasion into account when deciding on the income source. This yields potential allocative inefficiency in the labor market. In addition, Dutch subjects evade more than the Albanians. We argue that the different levels of tax evasion outside of the laboratory in the two types of countries can be attributed to distinct formal tax institutions.
KW - Comparative analysis
KW - Experiment
KW - Institutions
KW - Tax evasion
KW - Transition
UR - http://www.scopus.com/inward/record.url?scp=33747893735&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=33747893735&partnerID=8YFLogxK
U2 - 10.1016/j.joep.2005.08.002
DO - 10.1016/j.joep.2005.08.002
M3 - Article
AN - SCOPUS:33747893735
SN - 0167-4870
VL - 27
SP - 402
EP - 422
JO - Journal of Economic Psychology
JF - Journal of Economic Psychology
IS - 3
ER -