Information Frictions and Learning Dynamics: Evidence from Tax Avoidance in Ecuador

Bohne, Albrecht; Nimczik, Jan Sebastian

doi:10.2139/ssrn.3185229

Cited by 6 publications

(3 citation statements)

References 38 publications

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“…This is achieved by extending the model ofAllingham and Sandmo (1972) andYitzhaki (1974) to allow for individuals to choose their occupation first and then take an evasion decision based on realised income. 7 SeeFrimmel et al (2019),Alstadsaeter et al (2019),Paetzold and Winner (2016), andBohne and Nimczik (2018).8 The indirect effect of a deterrence letter has been confirmed byPomeranz (2015), using data for Chile, and byDrago et al (2020) in a field experiment in Austria based on a geographical network.9 In their model, individuals care about relative consumption and, for this reason, taxpayers that are more central (influencers) have higher incentive for tax evasion.…”

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confidence: 94%

Tax evasion and social reputation: The role of influencers in a social network

Gioacchino

Fichera

2022

Metroeconomica

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In this paper, we present an agent-based model in which taxpayers 'live' in a network and care about their social reputation. Individuals decide whether to pay or to evade taxes considering the expected economic net benefit and the reputational cost from tax evasion. Individuals differ in income and in the weight they attach to social reputation, which is updated by assessing the opinions shared in their reference group. The reference group contains individuals irrespective of their income (integrated society) or it is made up of peers belonging to the same income group (segregated society). We simulate the model in the two alternative settings to find the frequency distribution of taxpayers in a dataset of random networks. The results indicate that, in an integrated society, network conformity is reached and all individuals either evade or pay their taxes. Conversely, a segregated society might generate obstacles to the diffusion of opinions and, as a result, tax evasion and tax compliance might coexist. Lastly, we consider the effects of a social media campaign starring a celebrity financed by a fiscal authority to increase overall tax compliance by exploiting the diffusion dynamics in the network. We show that such a policy is more effective if the diffusion of opinions is not hindered by social segregation.

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confidence: 94%

Tax evasion and social reputation: The role of influencers in a social network

Gioacchino

Fichera

2022

Metroeconomica

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“…Kemp (2019) uses the bracket creep approach in the South African context, and his preferred elasticity is approximately 0.3. For Ecuador, Bohne and Nimczik (2018) illustrate how taxpayers learn to optimize taxes when entering the formal economy; and Lopez-Luzuriaga (2021) analyses how reporting requirements may weaken tax compliance. Tortarolo et al (2020) in turn examine intertemporal labour supply elasticity using Argentinian administrative data.…”

Section: Introductionmentioning

confidence: 99%

Taxpayer Response to Greater Progressivity: Evidence from Personal Income Tax Reform in Uganda

Jouste¹,

Kaidu

Okello

et al. 2022

SSRN Journal

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“…Additional empirical work isCebula (2013) who shows a positive relation between IRS measures of aggregate tax evasion and government satisfaction.8 In line with this empirical evidence on the existence of social norms, Traxler (2010) incorporates social norms into the standardAllingham and Sandmo (1972)-model and models them as depending on the tax-compliance behavior of other citizens (whereby more evaders in the society increase the individual willingness to evade) Fortin et al (2007),Chetty et al (2013). andBohne and Nimczik (2018) are further examples from tax-related contexts showing that the behavior of other people affects individual behavior.…”

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confidence: 97%