Type | Working Paper |
Title | Informality and contribution evasion: Evidence from Bulgaria |
Author(s) | |
Publication (Day/Month/Year) | 2008 |
URL | http://www.eea-esem.com/files/papers/EEA-ESEM/2008/810/determinants11.pdf |
Abstract | This paper analyzes job informality, defined as the evasion of social security contributions. A representative worker maximizes expected intertemporal utility by choosing the optimal fraction of evaded taxes, which is decreasing in the survival probability and in the Bismarckian factor characterizing the pension system. However, a fully Bismarckian system does not necessarily minimize tax evasion in an economy with heterogenous agents. The empirical analysis provides some support for the theoretical model, although the relationship between subjective survival probability and probability of job informality is negative when focusing on the old age pension, but not statistically significant when considering the whole social security package. |
» | Bulgaria - Labour Force Survey 2006 |