Why do Individuals Evade Payroll and Income Taxation in Estonia?

Kriz, Kenneth A.; Meriküll, Jaanika; Paulus, Alari; Stæhr, Karsten

doi:10.2139/ssrn.968829

Cited by 19 publications

(17 citation statements)

References 15 publications

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“…The only study we are aware of, devoted to tax-evasion in Estonia, does not find any difference between the ethnic groups in terms of tax-evasion behaviour (Kriz et al, 2007).…”

Section: Measurement Errorsmentioning

confidence: 71%

Emerging ethnic wage gap: Estonia during political and economic transition

Leping¹,

Toomet

2008

Journal of Comparative Economics

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“…The only study we are aware of, devoted to tax-evasion in Estonia, does not find any difference between the ethnic groups in terms of tax-evasion behaviour (Kriz et al, 2007).…”

Section: Measurement Errorsmentioning

confidence: 71%

Emerging ethnic wage gap: Estonia during political and economic transition

Leping¹,

Toomet

2008

Journal of Comparative Economics

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“…Such reasoning is completely legitimate since there are no obvious positive long-term benefits of this practice for workers, while the list of negative aspects is quite long (as explained). The lack of formal employment had thus been recognised as the main factor behind the decision of workers to accept such arrangements (Hazans, 2005; Kriz et al, 2007; Woolfson, 2007). Indeed, since under-declared jobs provide at least minimum social protection, they certainly represent a more appealing option than fully undeclared work.…”

Section: Drivers Of Quasi-formal Employment: a Literature Reviewmentioning

confidence: 99%

Explaining workers’ role in illegitimate wage underreporting practice: Evidence from the European Union

Franić

2019

The Economic and Labour Relations Review

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Despite substantial endeavours of international institutions and governments around the world to promote decent work, recent years have witnessed resurgence of non-standard and precarious labour practices. This article scrutinises one of the most recently described types of non-standard work, which is known as quasi-formal or under-declared employment. Companies relying on this illegitimate strategy, which is particularly prevalent in Europe, deliberately misreport the take-home pay of their formally employed workers. Alongside the officially declared wage, a quasi-formal worker thus receives an additional cash-in-hand payment which remains untaxed. To explore why so many European Union workers accept quasi-formal jobs in spite of obvious limitations, we report the evidence from interviews with 616 workers who were surveyed within the Special Eurobarometer 284/Wave 67.3. A two-level cumulative logistic regression emphasises tax morale and the exact function of the cash-in-hand payment as the key factors in this respect. On the other hand, neither perceived detection risk nor expected penalties are found to affect the readiness of quasi-formal workers to keep obeying an illegitimate arrangement with their employer. These findings therefore endorse recent studies on the matter, which illuminate low trust in the state and fellow citizens as the main reason for many workers to voluntarily misreport their income. JEL Codes: E26, H26, J46

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“…They found that firm-related characteristics, such as type of activity, firm size and employment changes, have a considerable influence on the prevalence of unreported employment. Kriz et al (2008) compiled data on informal employment from three different sources: a survey of self-reported tax evasion by the Estonian Institute for Economic Research, compliance data from audits of individuals by the Estonian Tax and Customs Board and The Labour Force Survey conducted by Statistics Estonia. Their findings indicate that the magnitude of informal employment differs significantly depending on the source (2.7% of respondents reporting not having a written contract, 66% of audited individuals were found to evade taxes and 14.4% of surveyed employees reported being paid under the table ).…”

Section: Review Of Literature On Informal Workmentioning

confidence: 99%

Estimation of the Size of Informal Employment Based on Administrative Records With Non-Ignorable Selection Mechanism

Beręsewicz

Nikulin

2021

Journal of the Royal Statistical Society Series C: Applied Statistics

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Empirical research on the shadow economy is extremely difficult, given limited knowledge about the characteristics of informal workers. Most available data on informal employment come from surveys, which implies an underestimated level of the phenomenon, because respondents are not willing to report their informal activities. It has been assumed that survey-based studies of informal employment and the shadow economy indicate only the lower boundary of this phenomenon. Moreover, other

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Why do Individuals Evade Payroll and Income Taxation in Estonia?

Cited by 19 publications

References 15 publications

Emerging ethnic wage gap: Estonia during political and economic transition

Emerging ethnic wage gap: Estonia during political and economic transition

Explaining workers’ role in illegitimate wage underreporting practice: Evidence from the European Union

Estimation of the Size of Informal Employment Based on Administrative Records With Non-Ignorable Selection Mechanism

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