Undeclared Work, Deterrence and Social Norms


July 2012


Externally reviewed

The Case of Germany


Written by: Lars P. Feld and Claus Larsen


For a long time, it has been the declared aim in many countries to fight tax evasion in all its different manifestations, from undeclared work by cleaners and gardeners in private households to tax evasion in the international capital markets. This study focuses on the phenomenon of undeclared work and the case of Germany, presenting the most comprehensive analysis of tax non-compliance for Germany to date, based on surveys conducted by the Rockwool Foundation Research Unit.


In theoretical terms, the analysis is based on the standard model of tax evasion being influenced by the subjectively perceived extent of deterrence, the perceived marginal tax burden and social norms. Evidence is provided concerning the impact of deterrence and other factors on tax non-compliance, and several descriptive statistics are presented to better illustrate the nature of undeclared work with regard to industry sector, region, education and other socio-economic factors.



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