Income Tax Flattening: Does it Help to Reduce the Shadow Economy?

@article{SabirianovaPeter2009IncomeTF,
  title={Income Tax Flattening: Does it Help to Reduce the Shadow Economy?},
  author={Klara Sabirianova Peter},
  journal={IZA Institute of Labor Economics Discussion Paper Series},
  year={2009}
}
This paper examines the effect of global transition to simpler, flatter income tax systems on the size of the shadow economy. By offering a new estimation framework, the paper revives the traditional electricity consumption approach to measuring the shadow economy. It overcomes the limitations of previous literature by using a new functional form, better quality data, a larger sample of 170 countries, a longer time span of 25 years, a panel framework, and instrumental variables. Our analysis…