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RESEARCH PRODUCT

Tax evasion, tax progression, and efficiency wages

Laszlo Goerke

subject

Economics and EconometricsDouble taxationLabour economicsValue-added taxTax creditAd valorem taxState income taxEconomicsDeferred taxTax reformFinanceIndirect tax

description

Abstract More progressive taxes raise employment in imperfect labour markets. However, this prediction is not robust. For example, any employment effect vanishes in a constant profit efficiency wage economy. It is demonstrated that tax evasion opportunities can re-establish positive employment effects of higher tax progression.

https://doi.org/10.1016/j.econlet.2003.07.013