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Unreported Labour

Author

Listed:
  • Ognedal, Tone

    (Dept. of Economics, University of Oslo)

  • Barth, Erling

    (Institute for Social Research,)

Abstract

Unreported labour by one worker in a firm increases the probability of detection for his fellow workers, not only for himself. The firm takes this external effect into account. As a consequence, unreported work becomes rationed by the firms demand, rather than determined by demand equal supply. The gap between supply and demand increases with firm size. An empirical analysis on survey data supports theses theoretical predictions. Using a bivariate probit model, we find evidence of excess supply of unreported work in firms. We also find that the gap between supply and demand increases with firm size.

Suggested Citation

  • Ognedal, Tone & Barth, Erling, 2005. "Unreported Labour," Memorandum 28/2005, Oslo University, Department of Economics.
    • Handle: RePEc:hhs:osloec:2005_028
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    File URL: http://www.sv.uio.no/econ/english/research/unpublished-works/working-papers/pdf-files/2005/Memo-28-2005.pdf
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    References listed on IDEAS

    as
    1. Sandmo, Agnar, 1981. "Income tax evasion, labour supply, and the equity--efficiency tradeoff," Journal of Public Economics, Elsevier, vol. 16(3), pages 265-288, December.
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    6. Lemieux, Thomas & Fortin, Bernard & Frechette, Pierre, 1994. "The Effect of Taxes on Labor Supply in the Underground Economy," American Economic Review, American Economic Association, vol. 84(1), pages 231-254, March.
    7. Lacroix, Guy & Fortin, Bernard, 1992. "Utility-Based Estimation of Labour Supply Functions in the Regular and Irregular Sectors," Economic Journal, Royal Economic Society, vol. 102(415), pages 1407-1422, November.
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    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Erling Barth & Alexander W. Cappelen & Tone Ognedal, 2013. "Fair Tax Evasion," Nordic Journal of Political Economy, Nordic Journal of Political Economy, vol. 38, pages 1-3.
    2. Leibfritz, Willi, 2011. "Undeclared economic activity in central and eastern Europe -- how taxes contribute and how countries respond to the problem," Policy Research Working Paper Series 5923, The World Bank.

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    More about this item

    Keywords

    tax evasion; unreported labour;

    JEL classification:

    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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