nep-iue New Economics Papers
on Informal and Underground Economics
Issue of 2012‒12‒15
four papers chosen by
Catalina Granda Carvajal
Universidad de Antioquia

  1. Human Capital Formation and Tax Evasion By Laszlo Goerke
  2. Macroeconomic implications of the dynamics between power and trust: a theoretical formalisation of the ‘slippery slope’ framework By Gaetano Lisi
  3. Matching models and housing markets: the role of the zero-profit condition By Gaetano Lisi
  4. Una estimación de la adulteración y la falsificación de bebidas alcohólicas en Colombia By Juan Gonzalo Zapata; Adriana Sabogal; Ana Cecilia Montes; Germán Rodríguez

  1. By: Laszlo Goerke
    Abstract: A strictly risk-averse individual with an exogenous gross income in period one can acquire human capital in the same period and evade taxes. Period-two income rises with educational investments in period one and can also be hidden from tax authorities. It is shown that a greater tax deductibility of educational investments and higher individual ability induce a positive correlation between tax evasion and educational investments in period two, whereas the relationship in period one is ambiguous. These theoretical predictions can explain diverse empirical findings on the correlation between education and tax evasion.
    Keywords: human capital, income tax, tax evasion
    JEL: H24 H26 I20
    Date: 2012
  2. By: Gaetano Lisi
    Abstract: This paper aims to provide a thorough theoretical formalisation of the ‘slippery slope’ framework in order to highlight the effects and the macroeconomic implications of the dynamics between power and trust. In particular, the proposed model is able to differentiate between coercive and legitimate power, thus elucidating the dynamics between power and trust and its influence on tax climate and tax compliance. Also, by introducing trust in tax authorities as a determinant of tax compliance, the decision to under-report income is no longer based on expected profits maximisation and thus the tax compliance problem can not be explained by a pure economic approach. The main results of the model are the following: (i) trust-building actions are better than deterring measures for overall tax compliance, since they establish a cooperative tax climate and lead to a legitimate power, while too much power corrodes trust; (ii) in a society where trust is maximised and tax authority benefits from a legitimate power, both employment and economic growth are higher since tax evasion and shadow economy are lower and the level of taxation can be reduced.
    Keywords: trust (in) and power (of) tax authorities, tax compliance, tax evasion macroeconomics variables.
    JEL: A12 A13 E26 H26 K34 K42
    Date: 2012–11–21
  3. By: Gaetano Lisi
    Abstract: The recent and growing literature which has extended the use of search and matching models even to the housing market does not use the free entry or zero-profit assumption as a key condition for solving the equilibrium of the model. This is because a straightforward adaptation of the basic matching model to the housing market seems impossible. However, this paper shows that the zero-profit condition can be easily reformulated to take the distinctive features of the housing market into account. Indeed, it helps to provide a theoretical explanation for well-known empirical regularities in the housing markets.
    Keywords: trust (in) and power (of) tax authorities, tax compliance, tax evasion macroeconomics variables.
    JEL: A12 A13 E26 H26 K34 K42
    Date: 2012–11–22
  4. By: Juan Gonzalo Zapata; Adriana Sabogal; Ana Cecilia Montes; Germán Rodríguez
    Abstract: "el objetivo de este trabajo es realizar un diagnóstico y estimación del tamaño del mercado de las bebidas alcohólicas adulteradas y falsificadas, esto es, conocer mejor su estructura de funcionamiento, la cadena completa de producción, distribución y comercialización, entre otros temas. Esta labor se adelantó, por un lado, a partir de un trabajo de campo con entrevistas a profundidad con los principales actores del mercado de las bebidas alcohólicas legales, un estudio de caso para las ciudades de Bogotá, Cali y Medellín, donde se entrevistó a las fuerzas de ventas de distribuidores de bebidas alcohólicas y se realizaron grupos focales con tenderos y, por otro lado, se midió la magnitud de esta actividad ilegal a partir del cálculo de la oferta residual de alcohol etílico en la economía colombiana (es decir, una medición en particular para las bebidas derivadas de la caña de azúcar). Adicionalmente se estimaron los costos fiscales (i.e. en las finanzas nacionales y departamentales) y las implicaciones para el gasto en salud y en recreación de los recursos dejados de percibir por concepto de la adulteración y/o falsificación de bebidas alcohólicas."
    Date: 2012–11–14

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