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The Implication of Efficiency Wages On Tax Evasion and Tax Collections

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  • Wen-Ya Chang

    (Fu-Jen Catholic University)

  • Ching-Chong Lai

    (Sun Yat-Sen Institute for Social Sciences and Philosophy, Academia Sinica)

Abstract

The conclusion of Peacock and Shaw's 1982 article "Tax Evasion and Tax Revenue Loss," which has received wide attention in the literature, indicates that a rise in tax evasion will definitely lead to lower tax collections. The present article makes a new attempt to reexamine the Peacock and Shaw proposition by introducing the principal tenets of the efficiency wage hypothesis. It is found that, in a context of efficiency wage model, a rise in the degree of tax evasion may enhance total tax collections rather than depress them.

Suggested Citation

  • Wen-Ya Chang & Ching-Chong Lai, 1996. "The Implication of Efficiency Wages On Tax Evasion and Tax Collections," Public Finance Review, , vol. 24(2), pages 163-172, April.
    • Handle: RePEc:sae:pubfin:v:24:y:1996:i:2:p:163-172
    DOI: 10.1177/109114219602400203
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    References listed on IDEAS

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    Cited by:

    1. Kolm, Ann-Sofie & Larsen, Birthe, 2001. "Wages, Unemployment, and the Underground Economy," Working Paper Series 2001:8, Uppsala University, Department of Economics.
    2. Laszlo Goerke, 2003. "Tax Progressivity and Tax Evasion," CESifo Working Paper Series 1097, CESifo.
    3. Ann-Sofie Kolm & Birthe Larsen, 2002. "Social Norm, the Informal Sector, and Unemployment," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 59(3), pages 407-407, August.
    4. Laszlo Goerke, 2003. "Tax Evasion and Tax Progressivity," Public Finance Review, , vol. 31(2), pages 189-203, March.
    5. Goerke, Laszlo, 1997. "Taxes in an efficiency wage economy," Discussion Papers, Series II 335, University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy".
    6. Goerke, Laszlo, 2004. "Tax evasion, tax progression, and efficiency wages," Economics Letters, Elsevier, vol. 82(1), pages 35-42, January.
    7. repec:ebl:ecbull:v:5:y:2008:i:15:p:1-6 is not listed on IDEAS

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