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Undeclared Work, Employer Tax Compliance, and Audits

Author

Listed:
  • Edoardo Di Porto

    (EQUIPPE at the Universitè de Sciences e Technologiè de Lille1, Lille, France, edoardo.diporto@univ-lille1.fr)

Abstract

This article analyzes employer labor tax evasion and the impact on this evasion of tax inspections by a labor inspectorate. The analysis is based on a unique data set built by linking two sources of information: a data set of individual artisan firms and an individual audit data set. Our data describe the universe of artisan firms in Piedmont (Italy) in 2000 to 2005. Using information on firm characteristics and tax evasion observed directly from the audit exercise, we estimate undeclared work in the artisan sector, and we then evaluate the impact of tax inspections on employer labor tax declarations. We find that inspections could actually be counterproductive, decreasing both tax compliance and tax revenues.

Suggested Citation

  • Edoardo Di Porto, 2011. "Undeclared Work, Employer Tax Compliance, and Audits," Public Finance Review, , vol. 39(1), pages 75-102, January.
  • Handle: RePEc:sae:pubfin:v:39:y:2011:i:1:p:75-102
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    Citations

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    Cited by:

    1. Eduardo Zilberman, 2016. "Audits or Distortions: The Optimal Scheme to Enforce Self-Employment Income Taxes," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 18(4), pages 511-544, August.
    2. Edoardo Di Porto & Leandro Elia & Cristina Tealdi, 2013. "The "emersion" effect: an ex post and ex ante social program evaluation on labor tax evasion in Italy," Working Papers 2/2013, IMT Institute for Advanced Studies Lucca, revised Jun 2013.
    3. Diego Ravenda & Josep Argilés-Bosch & Maika Valencia-Silva, 2015. "Labor Tax Avoidance and Its Determinants: The Case of Mafia Firms in Italy," Journal of Business Ethics, Springer, vol. 132(1), pages 41-62, November.
    4. Leandro Elia & Edoardo Di Porto, 2011. "Undeclared Work And Wage Inequality," Working Papers 201108, Università della Calabria, Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF.
    5. Pickhardt, Michael & Prinz, Aloys, 2014. "Behavioral dynamics of tax evasion – A survey," Journal of Economic Psychology, Elsevier, vol. 40(C), pages 1-19.

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