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Tax Morale after the Reunification of Germany: Results from a Quasi-Natural Experiment

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Author Info
Lars P. Feld
Benno Torgler

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Abstract

This paper provides a comparison of tax morale between inhabitants of East and West Germany in its post-reunification period, using three World Values Survey/European Values Survey waves between 1990 and 1999. The setting of German reunification is particularly interesting for the analysis of tax morale as it is close to a natural experiment. Many factors can be controlled because they are similar, as, e.g., a common language, similar education systems and a shared cultural and political history prior to the separation after the Second World War. As a consequence, an East-West comparison has a methodological advantage compared to cross-country studies. Our findings show higher tax morale in East than in West Germany. However, in only 9 years after reunification, tax morale values strongly converged, especially due to a strong change in the level of tax morale in the East.

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Paper provided by Center for Research in Economics, Management and the Arts (CREMA) in its series CREMA Working Paper Series with number 2007-03.

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Date of creation: Jan 2007
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Handle: RePEc:cra:wpaper:2007-03

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Related research
Keywords: Tax Morale; Tax Evasion; Deterrence; Quasi-Natural Experiment;

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Find related papers by JEL classification:
H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion
H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects
D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy-Making and Implementation
C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments

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    Other versions:
  2. Bruno Frey & Lars Feld, 2002. "Deterrence and Morale in Taxation: An Empirical Analysis," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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  8. Hunt, Jennifer, 2000. "Why Do People Still Live in East Germany?," IZA Discussion Papers 123, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
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    Other versions:
  17. Lars P. Feld & Bruno S. Frey, 2006. "Tax Compliance as the Result of a Psychological Tax Contract: The Role of Incentives and Responsive Regulation," CREMA Working Paper Series 2006-10, Center for Research in Economics, Management and the Arts (CREMA). [Downloadable!]
    Other versions:
  18. Posner, Eric A, 1998. "Symbols, Signals, and Social Norms in Politics and the Law," Journal of Legal Studies, University of Chicago Press, vol. 27(2), pages 765-98, June.
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