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The literacy impact on tax revenues

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  • Mutascu, Mihai
  • Danuletiu, Dan

Abstract

The paper investigates the relationship between tax revenues and literacy level, using a panel-model approach. The dataset covers the period 1996 to 2010 and includes 123 countries. The estimations suggest that the assumed function is nonlinear, with inverted-U and U-shaped curves. More precisely, a very low literacy level is associated with reduced tax revenues. Furthermore, the government inputs increase as the literacy level increases, reaching a maximum point. Beyond this level, the tax revenues decrease even if the literacy has an ascendant tendency, registering a minimum level. Finally, the tax revenues increase in a parallel manner with the literacy index.

Suggested Citation

  • Mutascu, Mihai & Danuletiu, Dan, 2013. "The literacy impact on tax revenues," Economics Discussion Papers 2013-63, Kiel Institute for the World Economy (IfW).
  • Handle: RePEc:zbw:ifwedp:201363
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    References listed on IDEAS

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    1. Agbeyegbe, Terence D. & Stotsky, Janet & WoldeMariam, Asegedech, 2006. "Trade liberalization, exchange rate changes, and tax revenue in Sub-Saharan Africa," Journal of Asian Economics, Elsevier, vol. 17(2), pages 261-284, April.
    2. Aidt, Toke S. & Eterovic, Dalibor S., 2011. "Political competition, electoral participation and public finance in 20th century Latin America," European Journal of Political Economy, Elsevier, vol. 27(1), pages 181-200, March.
    3. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    4. Leuthold, Jane H., 1991. "Tax shares in developing economies A panel study," Journal of Development Economics, Elsevier, vol. 35(1), pages 173-185, January.
    5. Richter, Wolfram F. & Wellisch, Dietmar, 1996. "The provision of local public goods and factors in the presence of firm and household mobility," Journal of Public Economics, Elsevier, vol. 60(1), pages 73-93, April.
    6. Mihai Mutascu, 2011. "Taxation and democracy," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 14(4), pages 343-348, December.
    7. Coulombe Serge & Tremblay Jean-Fran├žois, 2006. "Literacy and Growth," The B.E. Journal of Macroeconomics, De Gruyter, vol. 6(2), pages 1-34, August.
    8. Roshaiza Taha & Nanthakumar Loganathan, 2008. "Causality Between Tax Revenue And Government Spending In Malaysia," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 2(2), pages 63-73.
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    1. repec:hur:ijaraf:v:7:y:2017:i:4:p:169-176 is not listed on IDEAS

    More about this item

    Keywords

    literacy; tax revenues; nonlinearity; effects; tax policy;

    JEL classification:

    • I20 - Health, Education, and Welfare - - Education - - - General
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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