What drives entrepreneurs underground? The role of tax morale

ABSTRACT

Using novel cross-country data, we examine whether and to what extent tax morale impacts informal entrepreneurship. Employing instrumental variables strategy, we find that countries with higher tax morale enjoy lower informal entrepreneurship.

KEYWORDS:

• Tax morale
• informal entrepreneurship
• cross-country data

JEL CLASSIFICATION:

• H26
• L26
• O17

Disclosure statement

No potential conflict of interest was reported by the authors.

Appendix

List of Countries: Argentina; Australia; Brazil; Canada; Chile; Colombia; Croatia; Egypt, Arab Rep.; Finland; France; Germany; Ghana; Guatemala; Hungary; India; Indonesia; Italy; Japan; Jordan; Kazakhstan; Korea, Rep.; Latvia; Macedonia, FYR; Malaysia; Mexico; Morocco; Netherlands; New Zealand; Norway; Pakistan; Peru; Philippines; Poland; Romania; Russian Federation; Singapore; Slovenia; South Africa; Spain; Sweden; Switzerland; Thailand; Tunisia; Turkey; Uganda; United Kingdom; United States; Uruguay; Zambia.