Template-type: ReDif-Paper 1.0
Author-Name: Lefebvre Mathieu 
Author-Name: Pestieau Pierre 
Author-Name: Riedl Arno 
Author-Name: Villeval Marie Claire 
Author-workplace-name: METEOR
Title: Tax Evasion, Welfare Fraud, and “the Broken Windows” Effect: An Experiment in Belgium, France and the Netherlands
Abstract: In a series of experiments conducted in Belgium (Wallonia and Flanders), France and theNetherlands, we compare behavior regarding tax evasion and welfare dodging, with and without information about others’ behavior. Subjects have to decide between a ‘registered’ income, the realization of which will be known to the tax authority for sure, and an ‘unregistered’ income that will only be known with some probability. This unregistered income comes from self-employment in the Tax treatment and from black labor supplementing some unemployment compensation in the Welfare treatment. Subjects have then to decide on whether reporting their income or not, knowing the risk of detection. The results show that (i) individuals evade more in the Welfare treatment than in the Taxtreatment; (ii) many subjects choose an option that allows for tax evasion or welfare fraud but report their income honestly anyway; (iii) examples of low compliance tend to increase tax evasion while examples of high compliance exert no influence; (iv) tax evasion is more frequent in France and the Netherlands; Walloons evade taxes less than the Flemish. There is no cross-country difference in welfare dodging.
Keywords: public economics ; 
Series: Research Memoranda
Creation-Date: 2011
Number: 023
File-URL: http://arnop.unimaas.nl/show.cgi?fid=21508
File-Format: application/pdf
File-Size: 510507
Handle: RePEc:unm:umamet:2011023