Human Capital Formation and Tax Evasion

15 Pages Posted: 11 Dec 2012

See all articles by Laszlo Goerke

Laszlo Goerke

University of Trier - Institute of Labour Law and Industrial Relations in the European Union; CESifo (Center for Economic Studies and Ifo Institute); IZA Institute of Labor Economics

Multiple version iconThere are 2 versions of this paper

Date Written: January 2013

Abstract

A strictly risk‐averse individual with an exogenous gross income in period one can acquire human capital in the same period and evade taxes. Period‐two income rises with educational investments in period one and can also be hidden from tax authorities. It is shown that a greater tax deductibility of educational investments and higher individual ability induce a positive correlation between tax evasion and educational investments in period two, whereas the relationship in period one is ambiguous. These theoretical predictions can explain diverse empirical findings on the correlation between education and tax evasion.

Keywords: human capital, income tax, tax evasion

JEL Classification: H24, H26, I20

Suggested Citation

Goerke, Laszlo, Human Capital Formation and Tax Evasion (January 2013). Bulletin of Economic Research, Vol. 65, Issue 1, pp. 91-105, 2013, Available at SSRN: https://ssrn.com/abstract=2187718 or http://dx.doi.org/10.1111/j.1467-8586.2012.00436.x

Laszlo Goerke (Contact Author)

University of Trier - Institute of Labour Law and Industrial Relations in the European Union ( email )

Behringstraße 21, 7. Floor, Building H
Trier, 54296
Germany

HOME PAGE: http://www.iaaeu.de/

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

IZA Institute of Labor Economics

Schaumburg-Lippe-Str. 7 / 9
Bonn, D-53072
Germany

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
2
Abstract Views
343
PlumX Metrics