Arbeitspapier
Minimum Wage and Tax Evasion: Theory and Evidence
The paper investigates the role of the minimum wage in a competi- tive economy in which there is underreporting of earnings by employed labour. The minimum wage induces higher compliance by some low- productivity workers and transforms a nominally neutral .scal system into a regressive one. A spike in the wage distribution at the mini- mum wage level appears and a positive correlation between the size of the spike and the size of the informal economy is predicted and documented using cross-country data for Europe. A further result is that employees whose officially declared earnings appear to be boosted by a minimum wage hike actually experience a decline in their true income. This prediction finds support in an empirical test using the massive increase in the minimum wage that took place in Hungary in 2001 as a quasi-natural experiment.
- ISBN
-
978-963-9588-93-6
- Language
-
Englisch
- Bibliographic citation
-
Series: IEHAS Discussion Papers ; No. MT-DP - 2007/1
- Classification
-
Wirtschaft
Wages, Compensation, and Labor Costs: Public Policy
Tax Evasion and Avoidance
Fiscal Policies and Behavior of Economic Agents: Firm
- Subject
-
Minimum Wage
Tax Evasion
Wage Distribution
Hungary
Mindestlohn
Steuervermeidung
Schattenwirtschaft
Lohnstruktur
Ungarn
- Event
-
Geistige Schöpfung
- (who)
-
Tonin, Mirco
- Event
-
Veröffentlichung
- (who)
-
Hungarian Academy of Sciences, Institute of Economics
- (where)
-
Budapest
- (when)
-
2007
- Handle
- Last update
-
10.03.2025, 11:43 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Tonin, Mirco
- Hungarian Academy of Sciences, Institute of Economics
Time of origin
- 2007
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