The Impact of Tax Morale and Institutional Quality on the Shadow Economy

By Benno Torgler, Friedrich Schneider. Social Science Research Network, 2009

762 citations recorded by the source corpus.

This paper uses a multivariate analysis to examine how countries‘ tax morale and institutional quality affect the shadow economy. The literature strongly emphasizes the quantitative importance of these factors in understanding the level of and changes in the shadow economy. Newly available data sources offer the unique opportunity to further illuminate a topic that has received increased attention. After controlling for a variety of potential factors, we find strong support that a higher tax morale and a higher institutional quality lead to a smaller shadow economy.

Subfields: Accounting, Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/cefb22e4e82b5e4ab05f60aee2267cd0d402327a

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Citations in the corpus

Tax Morale, Eastern Europe and European Enlargement (2011, background): “Torgler and Schneider (2007, 2009) show that that improving governance and institutional quality and tax morale helps lessen a possible incentive to go underground.”
Determinants of the Level of Informality of Informal Micro-Enterprises: Some Evidence from the City of Lahore, Pakistan (2016, background): “This is doubtless because the perceived level of state corruption has an adverse effect on the trust that entrepreneurs have in the state and leads to their voluntary exit from the formal economy (Levin & Satarov 2000; Torgler & Schneider 2009; De Soto 1989).”
Walking Inside the Potential Tax Evader’s Mind: Tax Morale Does Matter (2005, background): “One recent article (Torgler and Schneider 2009) goes further in analyzing the impact of tax morale and the institutional quality on the shadow economy.”
Tax morale and public spending inefficiency (2011, neutral): “18 Similarly, Torgler (2005b), Alm and Torgler (2006), and Torgler and Schneider (2009) observe a signif-”
Trust and power as determinants of tax compliance: Testing the assumptions of the slippery slope framework in Austria, Hungary, Romania and Russia (2013, background): “Torgler and Schneider (2009) showed that in many countries tax morale and the high quality of societal institutions contribute to the reduction of the shadow economy.”