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Tax evasion and well-being: A study of the social and institutional context in Central and Eastern Europe

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  • Ferrer-i-Carbonell, Ada
  • Gërxhani, Klarita

Abstract

The paper examines the relationship between tax evasion and individuals’ well-being by using a subjective question on life satisfaction in fourteen Central and Eastern European countries. The paper focuses on the role of institutions and social capital in molding this relationship. The results indicate that evading taxes is negatively associated with individuals’ life satisfaction. This negative relationship seems to be shaped by a positive perception of formal tax-related institutions and a high level of formal social capital. A similar analysis run for two generational groups, distinguished in terms of whether having had working experience during communism, yields further interesting results: while associational engagement (i.e. formal social capital) has a crucial role to the younger generation in the way they experience the relationship between evading tax and how satisfied they are with their life, for the older generation it is their social networks (i.e. informal social capital) that shape this relationship.

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  • Ferrer-i-Carbonell, Ada & Gërxhani, Klarita, 2016. "Tax evasion and well-being: A study of the social and institutional context in Central and Eastern Europe," European Journal of Political Economy, Elsevier, vol. 45(S), pages 149-159.
    • Handle: RePEc:eee:poleco:v:45:y:2016:i:s:p:149-159
    DOI: 10.1016/j.ejpoleco.2016.09.004
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    2. Călin Vâlsan & Elena Druică & Rodica Ianole-Călin, 2020. "State Capacity and Tolerance towards Tax Evasion: First Evidence from Romania," Administrative Sciences, MDPI, vol. 10(2), pages 1-18, June.
    3. Maciej A. Górecki & Natalia Letki, 2021. "Social Norms Moderate the Effect of Tax System on Tax Evasion: Evidence from a Large-Scale Survey Experiment," Journal of Business Ethics, Springer, vol. 172(4), pages 727-746, September.
    4. Colin C. Williams & Brunilda Kosta, 2019. "Evaluating Institutional Theories Of Informal Sector Entrepreneurship: Some Lessons From Albania," Journal of Developmental Entrepreneurship (JDE), World Scientific Publishing Co. Pte. Ltd., vol. 24(02), pages 1-17, June.
    5. Lukasz Arendt & Wojciech Grabowski & Iwona Kukulak-Dolata, 2020. "County-Level Patterns of Undeclared Work: An Empirical Analysis of a Highly Diversified Region in the European Union," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 149(1), pages 271-295, May.
    6. Emily M Thornton & Lara B Aknin & Nyla R Branscombe & John F Helliwell, 2019. "Prosocial perceptions of taxation predict support for taxes," PLOS ONE, Public Library of Science, vol. 14(11), pages 1-12, November.
    7. Daniel Iulius Doagă, 2019. "Considerations Regarding Tax Evasion and Its Implications," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(2), pages 727-734, December.
    8. Lane, Tom, 2017. "How does happiness relate to economic behaviour? A review of the literature," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 68(C), pages 62-78.
    9. Beata Holkova & Eva Malichova & Lukas Falat & Lucia Pancikova, 2023. "Determinants of Tax Ethics in Society: Statistical and Logistic Regression Approach," Mathematics, MDPI, vol. 11(10), pages 1-21, May.

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    More about this item

    Keywords

    Life satisfaction; Subjective well-being; Tax evasion; Institutions; Social capital;
    All these keywords.

    JEL classification:

    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • P34 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Finance

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