Unemployment, tax evasion and the slippery slope framework
AbstractThe proposed theoretical work introduces the basic insights of the ‘slippery slope’ framework into the benchmark macroeconomic model of the labour market in order to study the relation between tax compliance, tax evasion and unemployment. This paper shows that the firm’s decision to evade taxes also depends on trust in tax authorities and affects one of the most important macroeconomic variables: the unemployment rate. Also, the model is able to mimic the crucial interaction between trust and power and its effects on tax compliance. The main result is that with the ‘right mix’ of policy tools of deterrence, trust in tax authorities is maximised, tax compliance increases and a reduction of tax evasion may decrease unemployment. Copyright Springer-Verlag 2012
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Bibliographic InfoArticle provided by Springer in its journal International Review of Economics.
Volume (Year): 59 (2012)
Issue (Month): 3 (September)
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Web page: http://www.springer.com/economics/journal/12232
Other versions of this item:
- Lisi, Gaetano, 2012. "Unemployment, tax evasion and the "slippery slope" framework," MPRA Paper 37433, University Library of Munich, Germany.
- J64 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment: Models, Duration, Incidence, and Job Search
- K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
- H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Sandmo, Agnar, 2005. "The Theory of Tax Evasion: A Retrospective View," National Tax Journal, National Tax Association, vol. 58(4), pages 643-63, December .
- Christopher A. Pissarides, 2000. "Equilibrium Unemployment Theory, 2nd Edition," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262161877, June.
- Gaetano Lisi, 2013. "Tax Morale, Tax Compliance and the Optimal Tax Policy," Discussion Papers in Economic Behaviour 0313, University of Valencia, ERI-CES.
- Gaetano Lisi, 2012.
"Macroeconomic implications of the dynamics between power and trust: a theoretical formalisation of the ‘slippery slope’ framework,"
Discussion Papers in Economic Behaviour
1012, University of Valencia, ERI-CES.
- Gaetano Lisi, 2012. "Macroeconomic implications of the dynamics between power and trust: a theoretical formalisation of the ‘slippery slope’ framework," EERI Research Paper Series EERI_RP_2012_21, Economics and Econometrics Research Institute (EERI), Brussels.
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