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Unreported employment and tax evasion in mid-transition : comparing developments and causes in the Baltic States

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  • Jaanika Merikull
  • Karsten Staehr

Abstract

This paper compares the prevalence and determinants of unreported employment in the three Baltic States in 1998 and 2002 using a hitherto little used dataset. The prevalence of unreported employment varies substantially across the three countries and across the two sampling years. Microeconometric estimations show that firm-related characteristics, such as sectoral activity, firm size and employment trends, are important determinants of unreported employment in all three countries, whereas the impact of individual factors varies across countries and time. It is shown that only 10�30 percent of the changes in unreported employment between 1998 and 2002 can be accounted for by changes in individual characteristics and firm-related factors. Provisional calculations suggest that the net gain for individuals undertaking unreported employment is modest, in particular among individuals who regularly engage in such activities

Suggested Citation

  • Jaanika Merikull & Karsten Staehr, 2008. "Unreported employment and tax evasion in mid-transition : comparing developments and causes in the Baltic States," Bank of Estonia Working Papers 2008-06, Bank of Estonia, revised 28 Nov 2008.
    • Handle: RePEc:eea:boewps:wp2008-06
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    References listed on IDEAS

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    Cited by:

    1. 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.
    2. Truman Packard & Johannes Koettl & Claudio E. Montenegro, 2012. "In From the Shadow : Integrating Europe's Informal Labor," World Bank Publications - Books, The World Bank Group, number 9377.

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    More about this item

    Keywords

    Unreported employment; informal employment; envelope wages; tax evasion;
    All these keywords.

    JEL classification:

    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • D19 - Microeconomics - - Household Behavior - - - Other

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