This paper explores the relation between R&D and economic growth using data from the EU-28 countries for the period 2001-2014. We consider panel data econometric techniques and control variables commonly used in the literature are analyzed together with a number of other variables to which existing studies often give little attention. Our results suggest that R&D expenditure and the patents (European Patent Office – EPO) have a positive and significant effect on economic growth for all countries.
{"title":"Factors Affecting the Relationship between Research and Development (R&D) and Economic Development in EU","authors":"Lyroni Athina, Anastasiou Athanasios, Liargovas Panagiotis, Dermatis Zacharias, Komninos Dimitrios","doi":"10.13189/AEB.2018.060506","DOIUrl":"https://doi.org/10.13189/AEB.2018.060506","url":null,"abstract":"This paper explores the relation between R&D and economic growth using data from the EU-28 countries for the period 2001-2014. We consider panel data econometric techniques and control variables commonly used in the literature are analyzed together with a number of other variables to which existing studies often give little attention. Our results suggest that R&D expenditure and the patents (European Patent Office – EPO) have a positive and significant effect on economic growth for all countries.","PeriodicalId":91438,"journal":{"name":"Advances in economics and business","volume":" ","pages":""},"PeriodicalIF":0.0,"publicationDate":"2018-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46417438","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2018-09-01DOI: 10.13189/AEB.2018.060507
S. Deepthi, Sumith Reddi Baddam, Vignesh Thangaraju
Customer Success is gaining priority for Organizations in transforming to recurring revenue business model. For this we need to shift our paradigm from being a “reactive troubleshooting” to “proactively advising” our customers. As part of this transformation various capabilities are being built, to capture customer data, have smart agents that collect information from customer networks to predict a failure before it happens and to advise the customer of the resolution. Products can be both hardware and software. It is trickier to predict a failure or an issue beforehand in software when compared to hardware because in hardware there are predefined set of symptoms for a failure. In software, predicting an issue beforehand means knowing and understanding what code is going in with each commit, defect or an enhancement. In most cases, defects found during internal testing, which are often neglected, crop up as customer issues at a later point in time. In this paper, we propose a solution to predict the potential defects that the customer might find after the release of the product using LSTM and CNN. We also predict the time (weeks or months) within which the customer might face this issue. This knowledge helps the teams to prioritize the defects and proactively resolve them on time before going live with known backlog of issues. Thus improving the quality of product that we deliver. Post production this can help proactively advise customers on these known issues that he might face and recommend a software patch or upgrade path. This paper is aimed at reducing internal failures cost component of Cost of Quality leads to Customer Retention and Success.
{"title":"Customer Success Using Deep Learning","authors":"S. Deepthi, Sumith Reddi Baddam, Vignesh Thangaraju","doi":"10.13189/AEB.2018.060507","DOIUrl":"https://doi.org/10.13189/AEB.2018.060507","url":null,"abstract":"Customer Success is gaining priority for Organizations in transforming to recurring revenue business model. For this we need to shift our paradigm from being a “reactive troubleshooting” to “proactively advising” our customers. As part of this transformation various capabilities are being built, to capture customer data, have smart agents that collect information from customer networks to predict a failure before it happens and to advise the customer of the resolution. Products can be both hardware and software. It is trickier to predict a failure or an issue beforehand in software when compared to hardware because in hardware there are predefined set of symptoms for a failure. In software, predicting an issue beforehand means knowing and understanding what code is going in with each commit, defect or an enhancement. In most cases, defects found during internal testing, which are often neglected, crop up as customer issues at a later point in time. In this paper, we propose a solution to predict the potential defects that the customer might find after the release of the product using LSTM and CNN. We also predict the time (weeks or months) within which the customer might face this issue. This knowledge helps the teams to prioritize the defects and proactively resolve them on time before going live with known backlog of issues. Thus improving the quality of product that we deliver. Post production this can help proactively advise customers on these known issues that he might face and recommend a software patch or upgrade path. This paper is aimed at reducing internal failures cost component of Cost of Quality leads to Customer Retention and Success.","PeriodicalId":91438,"journal":{"name":"Advances in economics and business","volume":" ","pages":""},"PeriodicalIF":0.0,"publicationDate":"2018-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48910762","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2018-09-01DOI: 10.13189/AEB.2018.060508
Naveen Wickremeratne, P. Dunusinghe
This study attempts to investigate the Youth Not in Education, Employment and Training (NEET) in Sri Lanka. The objectives of this study include identifying the share of youth NEET in Sri Lanka as a percentage of population with regards to national, sectoral, gender, education, ethnicity and marital status, and to identify the determinants of those who are NEET. This study is based on cross-sectional data obtained from Sri Lanka Labour Force Survey (SLFS) 2015. The methodology adopted for the study consists of two major components. First component attempts to generate youth NEET estimates for Sri Lanka using descriptive statistics tools. The second component of the methodology includes a logistic regression analysis to identify the determinants of youth NEET. The study found that Sri Lanka has a significantly high youth NEET rate of 25.8 percent in 2015, which is unsatisfactory to the Sri Lankan labour market. This raises the labour market vulnerability with regards to youth population of Sri Lanka. The research also found the significant NEET disparities among youths by sector, gender, age, education, ethnicity and marital status. Moreover, the logistic regression analysis identified age, gender, education, residential sector and marital status as the significant determinants of youth NEET in Sri Lanka.
{"title":"Youth Not in Education, Employment and Training (NEET) in Sri Lanka","authors":"Naveen Wickremeratne, P. Dunusinghe","doi":"10.13189/AEB.2018.060508","DOIUrl":"https://doi.org/10.13189/AEB.2018.060508","url":null,"abstract":"This study attempts to investigate the Youth Not in Education, Employment and Training (NEET) in Sri Lanka. The objectives of this study include identifying the share of youth NEET in Sri Lanka as a percentage of population with regards to national, sectoral, gender, education, ethnicity and marital status, and to identify the determinants of those who are NEET. This study is based on cross-sectional data obtained from Sri Lanka Labour Force Survey (SLFS) 2015. The methodology adopted for the study consists of two major components. First component attempts to generate youth NEET estimates for Sri Lanka using descriptive statistics tools. The second component of the methodology includes a logistic regression analysis to identify the determinants of youth NEET. The study found that Sri Lanka has a significantly high youth NEET rate of 25.8 percent in 2015, which is unsatisfactory to the Sri Lankan labour market. This raises the labour market vulnerability with regards to youth population of Sri Lanka. The research also found the significant NEET disparities among youths by sector, gender, age, education, ethnicity and marital status. Moreover, the logistic regression analysis identified age, gender, education, residential sector and marital status as the significant determinants of youth NEET in Sri Lanka.","PeriodicalId":91438,"journal":{"name":"Advances in economics and business","volume":"1 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2018-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"66222181","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2018-07-01DOI: 10.13189/aeb.2018.060401
T. Golubkova, Alla Iljina, Mg.oec
The article deals with the socio-cultural factors of the macro-environment which can influence on the production and distribution of cultural products in Latvia. Among the main factors the level of education, social stratification, attitude in the society towards charity and culture as a whole are emphasized. Using the materials of the European studies and the results of the carried out survey of visitors of the state institutions of culture of Latvia, the authors carry out a comparative analysis of the influence of social and cultural factors on the European and Latvian market of the cultural products.
{"title":"The Influence of the Socio-cultural Environmental Factors on the Marketing of Cultural Institutions of Latvia","authors":"T. Golubkova, Alla Iljina, Mg.oec","doi":"10.13189/aeb.2018.060401","DOIUrl":"https://doi.org/10.13189/aeb.2018.060401","url":null,"abstract":"The article deals with the socio-cultural factors of the macro-environment which can influence on the production and distribution of cultural products in Latvia. Among the main factors the level of education, social stratification, attitude in the society towards charity and culture as a whole are emphasized. Using the materials of the European studies and the results of the carried out survey of visitors of the state institutions of culture of Latvia, the authors carry out a comparative analysis of the influence of social and cultural factors on the European and Latvian market of the cultural products.","PeriodicalId":91438,"journal":{"name":"Advances in economics and business","volume":" ","pages":""},"PeriodicalIF":0.0,"publicationDate":"2018-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49441718","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2018-07-01DOI: 10.13189/AEB.2018.060406
S. Moid
The Indian economy is witnessing streamlined and focused efforts, of the kind off late for the implementation of the Goods and Service Tax (GST). With the services sector accounting for 60% of the GDP, the impact of GST on the service sector is likely to run deep. GST is undisputedly the single largest indirect tax reform since independence. It has the ability to change India's indirect taxation landscape and resulting in a positive impact on the entire economy. The present study is an attempt to understand the impact of GST on Insurance Industry along with highlighting the basic concept of GST, models of GST and its pros and cons in Indian context. The study also highlights the challenges in implementing the system. The introduction of GST will have a definitive impact on services offered by the life insurance sector. Seeking to levy GST on life insurance services would be in contrast to several countries where life insurance is a social security benefit being provided. Given the strategic importance of life insurance sector and the vast untapped market, it is believed that Government will address the concerns of the industry including ensuring merit rate of GST on insurance sector.
{"title":"Challenges and Opportunities in Implementation of GST Bill for Insurance Sector in India","authors":"S. Moid","doi":"10.13189/AEB.2018.060406","DOIUrl":"https://doi.org/10.13189/AEB.2018.060406","url":null,"abstract":"The Indian economy is witnessing streamlined and focused efforts, of the kind off late for the implementation of the Goods and Service Tax (GST). With the services sector accounting for 60% of the GDP, the impact of GST on the service sector is likely to run deep. GST is undisputedly the single largest indirect tax reform since independence. It has the ability to change India's indirect taxation landscape and resulting in a positive impact on the entire economy. The present study is an attempt to understand the impact of GST on Insurance Industry along with highlighting the basic concept of GST, models of GST and its pros and cons in Indian context. The study also highlights the challenges in implementing the system. The introduction of GST will have a definitive impact on services offered by the life insurance sector. Seeking to levy GST on life insurance services would be in contrast to several countries where life insurance is a social security benefit being provided. Given the strategic importance of life insurance sector and the vast untapped market, it is believed that Government will address the concerns of the industry including ensuring merit rate of GST on insurance sector.","PeriodicalId":91438,"journal":{"name":"Advances in economics and business","volume":" ","pages":""},"PeriodicalIF":0.0,"publicationDate":"2018-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47419819","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2018-07-01DOI: 10.13189/aeb.2018.060402
A. Guliyeva, U. Rzayeva
At present, the issues of expanding government intervention in the economy and advantages of state regulation are being discussed quite actively. At the same time, it is wrong to turn a blind eye to the problems caused by such interference. One of the “failures of the state” is connected with information asymmetry arising due to monopolization of information by employees of the state apparatus who use these advantages in their own interests. In any state system, there will always be the mechanisms of supporting the representatives’ exclusivity in relation to the rest of the population. The formation of an electronic government with the use of modern information and communication technologies allows significantly increase information transparency in the state structures. The article considers asymmetry of information held up by the power and conformism of the society maintaining the idea of privacy. In addition, the paper suggests a multi-level approach (macro-, meso- and microlevels) for managing competitive advantages, which allows balancing of economic interests in terms of reducing information asymmetry.
{"title":"The Role of E-government in Reduction of Information Asymmetry in Developing Countries on the Example of Azerbaijan","authors":"A. Guliyeva, U. Rzayeva","doi":"10.13189/aeb.2018.060402","DOIUrl":"https://doi.org/10.13189/aeb.2018.060402","url":null,"abstract":"At present, the issues of expanding government intervention in the economy and advantages of state regulation are being discussed quite actively. At the same time, it is wrong to turn a blind eye to the problems caused by such interference. One of the “failures of the state” is connected with information asymmetry arising due to monopolization of information by employees of the state apparatus who use these advantages in their own interests. In any state system, there will always be the mechanisms of supporting the representatives’ exclusivity in relation to the rest of the population. The formation of an electronic government with the use of modern information and communication technologies allows significantly increase information transparency in the state structures. The article considers asymmetry of information held up by the power and conformism of the society maintaining the idea of privacy. In addition, the paper suggests a multi-level approach (macro-, meso- and microlevels) for managing competitive advantages, which allows balancing of economic interests in terms of reducing information asymmetry.","PeriodicalId":91438,"journal":{"name":"Advances in economics and business","volume":" ","pages":""},"PeriodicalIF":0.0,"publicationDate":"2018-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49049259","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2018-07-01DOI: 10.13189/AEB.2018.060404
S. Chakraborty
India's rising income inequality to large extent is caused by the enormous difference in learning outcomes after completion of education. Decomposition analysis of India's current state of inequality points out that rural income inequality causes this outcome. The interstate difference in mean income and the urban-rural gap of mean income within states are often held responsible for giving rise to India's current state of income inequality. Intra-state income inequality is no less responsible. Non-farm sector has been expanding rapidly and within that category service sector is expanding. Service sector works need skills in various trades. Thus, unskilled and semi-skilled workers are left out in this new pattern. Formal employment is also characterized by duel wage structure. Income disparity or earning differential has its roots embedded in education delivery system in particular and human capital formation in general. The state must create opportunities for growth for all through provisioning of universal quality education and healthcare.
{"title":"Reflecting on Contemporary India's Rising Inequality: Does Differential Rate of Return to Education Matter?","authors":"S. Chakraborty","doi":"10.13189/AEB.2018.060404","DOIUrl":"https://doi.org/10.13189/AEB.2018.060404","url":null,"abstract":"India's rising income inequality to large extent is caused by the enormous difference in learning outcomes after completion of education. Decomposition analysis of India's current state of inequality points out that rural income inequality causes this outcome. The interstate difference in mean income and the urban-rural gap of mean income within states are often held responsible for giving rise to India's current state of income inequality. Intra-state income inequality is no less responsible. Non-farm sector has been expanding rapidly and within that category service sector is expanding. Service sector works need skills in various trades. Thus, unskilled and semi-skilled workers are left out in this new pattern. Formal employment is also characterized by duel wage structure. Income disparity or earning differential has its roots embedded in education delivery system in particular and human capital formation in general. The state must create opportunities for growth for all through provisioning of universal quality education and healthcare.","PeriodicalId":91438,"journal":{"name":"Advances in economics and business","volume":" ","pages":""},"PeriodicalIF":0.0,"publicationDate":"2018-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46878493","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2018-07-01DOI: 10.13189/aeb.2018.060405
G. Chikowore, H. Annegarn
Proportional territorial distribution of productive forces historically determined the emergence of socio-economic geography. Deepening regional integration under scrutiny of socio-economic geography culminated in a system of economic regions. These economic regions were further used as special instruments on functional optimisation and management of productive forces guided by specialisation of labor. The process was influenced by scientific and technological advancements, which led to change from a single-sided to an integral multi-factor approach. In these circumstances socio-economic cultural regions emerged as functionally specialised territorial units presenting optimum combinations of productive and non-productive industrial sectors and enterprises. Within this context, the study analyses the role of socio-economic geography in better informing regional integration with reference to South Africa and Zimbabwe. New conceptual terms, such as socio-economic cultural disparities and territorial socio-economic cultural inequalities are proposed. Informed by transformation development theory, the study employs comparative methods of quantitative and qualitative data analysis. It analyses five aspects: (i) application of socio-economic geography to questions of regional integration; (ii) territorial differentiation, factors, forces and relations; (iii) Benefits of economic cooperation and integration for South Africa and Zimbabwe with global economy; (iv) essence of North-South and South-South dialogue; and (v) prospects of the role of socio-economic geography. The conclusions emphasise the role of socio-economic geography, using the newly defined concepts, in articulating a comprehensive theoretical and practical understanding of the processes needed to enhance regional integration.
{"title":"Analysing the New Millennium Role and Place of Socio-economic Geography in Deepening Regional Economic Cooperation and Integration: The Case of South Africa and Zimbabwe","authors":"G. Chikowore, H. Annegarn","doi":"10.13189/aeb.2018.060405","DOIUrl":"https://doi.org/10.13189/aeb.2018.060405","url":null,"abstract":"Proportional territorial distribution of productive forces historically determined the emergence of socio-economic geography. Deepening regional integration under scrutiny of socio-economic geography culminated in a system of economic regions. These economic regions were further used as special instruments on functional optimisation and management of productive forces guided by specialisation of labor. The process was influenced by scientific and technological advancements, which led to change from a single-sided to an integral multi-factor approach. In these circumstances socio-economic cultural regions emerged as functionally specialised territorial units presenting optimum combinations of productive and non-productive industrial sectors and enterprises. Within this context, the study analyses the role of socio-economic geography in better informing regional integration with reference to South Africa and Zimbabwe. New conceptual terms, such as socio-economic cultural disparities and territorial socio-economic cultural inequalities are proposed. Informed by transformation development theory, the study employs comparative methods of quantitative and qualitative data analysis. It analyses five aspects: (i) application of socio-economic geography to questions of regional integration; (ii) territorial differentiation, factors, forces and relations; (iii) Benefits of economic cooperation and integration for South Africa and Zimbabwe with global economy; (iv) essence of North-South and South-South dialogue; and (v) prospects of the role of socio-economic geography. The conclusions emphasise the role of socio-economic geography, using the newly defined concepts, in articulating a comprehensive theoretical and practical understanding of the processes needed to enhance regional integration.","PeriodicalId":91438,"journal":{"name":"Advances in economics and business","volume":" ","pages":""},"PeriodicalIF":0.0,"publicationDate":"2018-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49232324","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2018-07-01DOI: 10.13189/AEB.2018.060403
H. Acuña, Diego Carrasco, Martínez Carrasco, F. Caro
This research studies the relation between unemployment and vacancies for Chile between 1994I-2012IV with a special focus on the stages of global crises. Looking at the data, we observed that consequently to the Asian financial crisis, Chile showed an outward shift from the Beveridge Curve which indicates an efficiency loss in the matching process between labor supply and demand. On the other hand, the curve moved inwards as a result of the sub-prime crisis, a proof that supports an improvement in the matching process. We examine a series of factors previously used in the literature with the aim to decompose the changes in the unemployment rate and distinguish the factors that explained the changes in the efficiency of the matching process during both crises. The results, point out that the composition of the labor force and the real wage level were the main variables that explained the efficiency changes.
{"title":"Dynamics of the Beveridge Curve and Global Crises","authors":"H. Acuña, Diego Carrasco, Martínez Carrasco, F. Caro","doi":"10.13189/AEB.2018.060403","DOIUrl":"https://doi.org/10.13189/AEB.2018.060403","url":null,"abstract":"This research studies the relation between unemployment and vacancies for Chile between 1994I-2012IV with a special focus on the stages of global crises. Looking at the data, we observed that consequently to the Asian financial crisis, Chile showed an outward shift from the Beveridge Curve which indicates an efficiency loss in the matching process between labor supply and demand. On the other hand, the curve moved inwards as a result of the sub-prime crisis, a proof that supports an improvement in the matching process. We examine a series of factors previously used in the literature with the aim to decompose the changes in the unemployment rate and distinguish the factors that explained the changes in the efficiency of the matching process during both crises. The results, point out that the composition of the labor force and the real wage level were the main variables that explained the efficiency changes.","PeriodicalId":91438,"journal":{"name":"Advances in economics and business","volume":" ","pages":""},"PeriodicalIF":0.0,"publicationDate":"2018-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45450137","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2018-07-01DOI: 10.13189/AEB.2018.060407
Insook Lee
This paper resolves two lingering theoretical ambiguities on how income tax evasion is affected by income tax rates and by probability of detecting the tax evasion (tax enforcement rate). Improving upon the models of previous studies that showed the ambiguous effect of income tax rate and tax enforcement rate on tax evasion, the model of this paper allows taxpayers to decide both tax evasion and labor supply, responding to nonlinear income tax schedule and enforcement rate, while it also allows the government to decide both tax schedule and tax enforcement rate. With endogenous labor supply and tax evasion of taxpayers as well as endogenous decision of the government on tax rates and tax enforcement rate, the model of this paper more general than the models of previous studies. With this general model, we resolve the ambiguity as follows. First, we show that income tax evasion always responds positively to an increase in the income tax rate. Second, we also prove that income tax evasion is always negatively affected by an increase in the rate of tax enforcement, which invalidates the puzzling case that enhanced tax enforcement can increase income tax evasion.
{"title":"Income Tax Evasion Responses to Tax Rate and Tax Enforcement Rate","authors":"Insook Lee","doi":"10.13189/AEB.2018.060407","DOIUrl":"https://doi.org/10.13189/AEB.2018.060407","url":null,"abstract":"This paper resolves two lingering theoretical ambiguities on how income tax evasion is affected by income tax rates and by probability of detecting the tax evasion (tax enforcement rate). Improving upon the models of previous studies that showed the ambiguous effect of income tax rate and tax enforcement rate on tax evasion, the model of this paper allows taxpayers to decide both tax evasion and labor supply, responding to nonlinear income tax schedule and enforcement rate, while it also allows the government to decide both tax schedule and tax enforcement rate. With endogenous labor supply and tax evasion of taxpayers as well as endogenous decision of the government on tax rates and tax enforcement rate, the model of this paper more general than the models of previous studies. With this general model, we resolve the ambiguity as follows. First, we show that income tax evasion always responds positively to an increase in the income tax rate. Second, we also prove that income tax evasion is always negatively affected by an increase in the rate of tax enforcement, which invalidates the puzzling case that enhanced tax enforcement can increase income tax evasion.","PeriodicalId":91438,"journal":{"name":"Advances in economics and business","volume":" ","pages":""},"PeriodicalIF":0.0,"publicationDate":"2018-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47095332","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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