Tax evasion is a complex phenomenon affected by many factors and shaped by policymakers' and citizens' behaviours. Distinct claims about the acceptability of tax evasion between centre-right and centre-left coalitions have clearly emerged in Italy in the last decades. According to the ruling coalition, these different attitudes could have influenced tax compliance, affecting reported incomes of the self-employed, who have much more room to engage in tax avoidance or evasion strategies than employees. Using a longitudinal administrative dataset recording the entire working life of the sampled individuals, we focus on the period 1996–2005 (the only period when a complete bipartisan political cycle took place in Italy) and, following a difference in differences design and carrying out fixed effects estimates, we test whether self-employed earnings, compared to employees earnings, significantly changed after the change in the ruling coalition.We find a clear reduction in self-employed reported earnings when the centre-right coalition ruled.
Political cycle and reported labour incomes in Italy: a quasi-experimental evidence on tax evasion / Raitano, Michele; Fantozzi, Roberto. - In: EUROPEAN JOURNAL OF POLITICAL ECONOMY. - ISSN 0176-2680. - STAMPA. - 39(2015), pp. 269-280. [dx.doi.org/10.1016/j.ejpoleco.2015.07.001]
Political cycle and reported labour incomes in Italy: a quasi-experimental evidence on tax evasion
Raitano, Michele;
2015
Abstract
Tax evasion is a complex phenomenon affected by many factors and shaped by policymakers' and citizens' behaviours. Distinct claims about the acceptability of tax evasion between centre-right and centre-left coalitions have clearly emerged in Italy in the last decades. According to the ruling coalition, these different attitudes could have influenced tax compliance, affecting reported incomes of the self-employed, who have much more room to engage in tax avoidance or evasion strategies than employees. Using a longitudinal administrative dataset recording the entire working life of the sampled individuals, we focus on the period 1996–2005 (the only period when a complete bipartisan political cycle took place in Italy) and, following a difference in differences design and carrying out fixed effects estimates, we test whether self-employed earnings, compared to employees earnings, significantly changed after the change in the ruling coalition.We find a clear reduction in self-employed reported earnings when the centre-right coalition ruled.File | Dimensione | Formato | |
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