Productivity and Tax Evasion
IMF Working Papers, November 27, 2019
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- Productivity and Tax Evasion
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Bibliographic details
- Authors: Era Dabla-Norris, Mark Gradstein, Fedor Miryugin, Florian Misch
- Published: November 27, 2019
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781513518619.001
Research question and approach
- Investigates whether higher productivity causally leads to lower tax evasion.
- Presents stylized facts consistent with the productivity→lower evasion view and develops a model illustrating one potential transmission channel.
- Tests model predictions at the firm level using the self-reported share of declared income as a proxy for tax evasion for a large sample of emerging and developing economies.
Key findings
- Productivity improvements by firms can lead to lower tax evasion.
- Empirical strategy: firm-level analysis using the self-reported share of declared income as proxy for tax evasion across a large sample of emerging and developing economies.
- The paper combines theoretical modeling (to illustrate a transmission channel) with empirical testing of model predictions.
Policy implications (implicit from analysis)
- Policies that improve firm productivity may also improve tax compliance and thereby increase revenue yield.
- Strengthening productivity-enhancing measures could help reduce distortions in competition caused by tax evasion and support development prospects through improved revenue collection.
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- Working Paper