IDEAS home Printed from https://ideas.repec.org/p/hhs/osloec/2005_028.html
   My bibliography  Save this paper

Unreported Labour

Author

Listed:
  • Ognedal, Tone

    (Dept. of Economics, University of Oslo)

  • Barth, Erling

    (Institute for Social Research,)

Abstract

Unreported labour by one worker in a firm increases the probability of detection for his fellow workers, not only for himself. The firm takes this external effect into account. As a consequence, unreported work becomes rationed by the firms demand, rather than determined by demand equal supply. The gap between supply and demand increases with firm size. An empirical analysis on survey data supports theses theoretical predictions. Using a bivariate probit model, we find evidence of excess supply of unreported work in firms. We also find that the gap between supply and demand increases with firm size.

Suggested Citation

  • Ognedal, Tone & Barth, Erling, 2005. "Unreported Labour," Memorandum 28/2005, Oslo University, Department of Economics.
    • Handle: RePEc:hhs:osloec:2005_028
    as

    Download full text from publisher

    File URL: http://www.sv.uio.no/econ/english/research/unpublished-works/working-papers/pdf-files/2005/Memo-28-2005.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Sandmo, Agnar, 1981. "Income tax evasion, labour supply, and the equity--efficiency tradeoff," Journal of Public Economics, Elsevier, vol. 16(3), pages 265-288, December.
    2. James Andreoni & Brian Erard & Jonathan Feinstein, 1998. "Tax Compliance," Journal of Economic Literature, American Economic Association, vol. 36(2), pages 818-860, June.
    3. Reinganum, Jennifer F. & Wilde, Louis L., 1985. "Income tax compliance in a principal-agent framework," Journal of Public Economics, Elsevier, vol. 26(1), pages 1-18, February.
    4. E. Paul Durrenberger, 2005. "Labour," Chapters, in: James G. Carrier (ed.), A Handbook of Economic Anthropology, chapter 8, Edward Elgar Publishing.
    5. Brian Erard & Jonathan S. Feinstein, 1994. "Honesty and Evasion in the Tax Compliance Game," RAND Journal of Economics, The RAND Corporation, vol. 25(1), pages 1-19, Spring.
    6. Lacroix, Guy & Fortin, Bernard, 1992. "Utility-Based Estimation of Labour Supply Functions in the Regular and Irregular Sectors," Economic Journal, Royal Economic Society, vol. 102(415), pages 1407-1422, November.
    7. Allingham, Michael G. & Sandmo, Agnar, 1972. "Income tax evasion: a theoretical analysis," Journal of Public Economics, Elsevier, vol. 1(3-4), pages 323-338, November.
    8. Reinganum, Jennifer F & Wilde, Louis L, 1986. "Equilibrium Verification and Reporting Policies in a Model of Tax Compliance," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 27(3), pages 739-760, October.
    9. Lemieux, Thomas & Fortin, Bernard & Frechette, Pierre, 1994. "The Effect of Taxes on Labor Supply in the Underground Economy," American Economic Review, American Economic Association, vol. 84(1), pages 231-254, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    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. Erling Barth & Alexander W. Cappelen & Tone Ognedal, 2013. "Fair Tax Evasion," Nordic Journal of Political Economy, Nordic Journal of Political Economy, vol. 38, pages 1-3.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Erling Barth & Alexander W. Cappelen & Tone Ognedal, 2013. "Fair Tax Evasion," Nordic Journal of Political Economy, Nordic Journal of Political Economy, vol. 38, pages 1-3.
    2. Johannes Lorenz, 2019. "Population dynamics of tax avoidance with crowding effects," Journal of Evolutionary Economics, Springer, vol. 29(2), pages 581-609, April.
    3. repec:noj:journl:v:38:y:2013:p:3 is not listed on IDEAS
    4. Leandro Arozamena & Martin Besfamille & Pablo Sanguinetti, 2010. "Optimal taxes and penalties when the government cannot commit to its audit policy," Department of Economics Working Papers 2010-10, Universidad Torcuato Di Tella.
    5. Slemrod, Joel & Yitzhaki, Shlomo, 2002. "Tax avoidance, evasion, and administration," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 3, chapter 22, pages 1423-1470, Elsevier.
    6. repec:tur:wpaper:1 is not listed on IDEAS
    7. Kim, Youngse, 2003. "Income distribution and equilibrium multiplicity in a stigma-based model of tax evasion," Journal of Public Economics, Elsevier, vol. 87(7-8), pages 1591-1616, August.
    8. Sebastián Castillo, 2024. "Tax policy design in a hierarchical model with occupational decisions," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 31(5), pages 1295-1341, October.
    9. Meng-Yu Liang & C.C. Yang, 2007. "On the Budget-Constrained IRS: Equilibrium and Equilibrium and efficiency," IEAS Working Paper : academic research 07-A002, Institute of Economics, Academia Sinica, Taipei, Taiwan.
    10. Eduardo Engel & James R. Hines Jr., 1998. "Understanding Tax Evasion Dynamics," Documentos de Trabajo 47, Centro de Economía Aplicada, Universidad de Chile.
    11. James Alm, 2019. "What Motivates Tax Compliance?," Journal of Economic Surveys, Wiley Blackwell, vol. 33(2), pages 353-388, April.
    12. Tiziano Razzolini, 2010. "Study on labour supply when tax evasion is an option with Box-Cox functional forms and random parameters," Applied Economics, Taylor & Francis Journals, vol. 42(28), pages 3669-3684.
    13. Glen Ueng, K. L. & Yang, C. C., 2001. "Plea bargaining with the IRS: extensions and further results," Journal of Public Economics, Elsevier, vol. 81(1), pages 83-98, July.
    14. Jordi Caballé & Judith Panadés, 2005. "Cost Uncertainty and Taxpayer Compliance," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 12(3), pages 239-263, May.
    15. Appelgren, Leif, 2020. "A survey of models for determining optimal audit strategies," Advances in accounting, Elsevier, vol. 48(C).
    16. Bayer, Ralph-C & Sutter, Matthias, 2009. "The excess burden of tax evasion--An experimental detection-concealment contest," European Economic Review, Elsevier, vol. 53(5), pages 527-543, July.
    17. Laura Sour, 2004. "An Economic Model of Tax Compliance with Individual Morality and Group Conformity," Economía Mexicana NUEVA ÉPOCA, CIDE, División de Economía, vol. 0(1), pages 43-61, January-J.
    18. María Jesús Freire‐Serén & Judith Panadés, 2008. "Does Tax Evasion Modify the Redistributive Effect of Tax Progressivity?," The Economic Record, The Economic Society of Australia, vol. 84(267), pages 486-495, December.
    19. Jellal, Mohamed, 2009. "Bureaucracy and Corruption Taxation Proof," MPRA Paper 17177, University Library of Munich, Germany.
    20. Lorenz, Johannes, 2017. "Population dynamics of tax avoidance with crowding effects," Passauer Diskussionspapiere, Volkswirtschaftliche Reihe V-76-17, University of Passau, Faculty of Business and Economics.
    21. Erling Eide & Kristine von Simson & Steinar Strøm, 2011. "Rank-Dependent Utility, Tax Evasion, and Labor Supply," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 67(3), pages 261-281, September.
    22. Catalina Granda-Carvajal, 2012. "Macroeconomic Implications of the Underground Sector: Challenging the Double Business Cycle Approach," Economic Analysis and Policy, Elsevier, vol. 42(2), pages 237-256, September.

    More about this item

    Keywords

    tax evasion; unreported labour;

    JEL classification:

    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hhs:osloec:2005_028. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Mari Strønstad Øverås (email available below). General contact details of provider: https://edirc.repec.org/data/souiono.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.