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The impact of tax morale and institutional quality on the shadow economy

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  • Torgler, Benno
  • Schneider, Friedrich

Abstract

This paper uses a multivariate analysis to examine how countries' tax morale and institutional quality affect the shadow economy. The literature strongly emphasizes the quantitative importance of these factors in understanding the level of and changes in the shadow economy. Newly available data sources offer the unique opportunity to further illuminate a topic that has received increased attention. After controlling for a variety of potential factors, we find strong support that a higher tax morale and a higher institutional quality lead to a smaller shadow economy.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Psychology.

Volume (Year): 30 (2009)
Issue (Month): 2 (April)
Pages: 228-245

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Handle: RePEc:eee:joepsy:v:30:y:2009:i:2:p:228-245

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Web page: http://www.elsevier.com/locate/joep

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Keywords: Shadow economy Tax morale Institutional quality Government intervention Corruption;

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