Does Tax Evation Affect Unemployment and Educational Choice?

Arbeitspapier

While examining the macroeconomic effects of government tax and punishment policies, this paper develops a three-sector general equilibrium model featuring matching frictions and worker-firm wage bargaining. Workers are assumed to differ in ability, and the choice of education is determined endogenously. Job opportunities in an informal sector are available only to workers who choose not to acquire higher education. We find that increased punishment of informal activities increases the number of educated workers and reduces the number of unemployed workers. The analysis also shows that knowledge spillovers give a welfare maximizing government an extra incentive to punish informal activities.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Paper ; No. 2003:22

Classification and Topics

• Classification: Wirtschaft ; Tax Evasion and Avoidance ; Analysis of Education ; Unemployment: Models, Duration, Incidence, and Job Search
• Subject: Tax evasion ; underground economy ; education ; matching ; unemployment ; Steuerflucht ; Arbeitslosigkeit ; Bildungsverhalten ; Schattenwirtschaft ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Kolm, Ann-Sofie ; Larsen, Birthe
• Event: Veröffentlichung
• (who): Uppsala University, Department of Economics
• (where): Uppsala
• (when): 2003

Further information

• Handle: http://hdl.handle.net/10419/82719
• URN: urn:nbn:se:uu:diva-4494
• Last update: 10.03.2025, 11:43 AM CET