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Cheating in Europe: underreporting of self-employment income in comparative perspective

Kukk, Merike and Paulus, Alari and Staehr, Karsten (2020) 'Cheating in Europe: underreporting of self-employment income in comparative perspective.' International Tax and Public Finance, 27 (2). pp. 363-390. ISSN 0927-5940

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Various national studies have used the expenditure method (Pissarides and Weber in J Public Econ 39(1):17–32, 1989) to estimate income underreporting by the self-employed relative to the wage earners. Within Europe, the studies mostly consider the UK or individual Nordic countries, while no data are available for most Southern European and Eastern European countries. This paper is the first to apply the expenditure method to a large number of EU countries using harmonised microdata and a common model specification to enhance cross-country comparability. We extend the number of countries studied using the expenditure method and contribute to the scarce comparative literature on tax non-compliance in general. Our estimates show substantial variation in income underreporting across countries, from under 10% to more than 40% of self-employed household income on average. The shares of underreporting do not appear to be related to the development level of the countries.

Item Type: Article
Uncontrolled Keywords: Income underreporting; Self-employment; Expenditure method; Tax compliance; Cross-country comparison
Divisions: Faculty of Social Sciences
Faculty of Social Sciences > Institute for Social and Economic Research
SWORD Depositor: Elements
Depositing User: Elements
Date Deposited: 05 Sep 2019 11:03
Last Modified: 06 Jan 2022 14:04

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