Simon Halphen Boserup, University of Copenhagen: "Essays on Tax Evasion and Enforcement and Intergenerational Wealth Mobility"

"Essays on Tax Evasion and Enforcement and Intergenerational Wealth Mobility"


This dissertation is comprised of three self-contained chapters. The first two are closely related as they both apply a structural model of tax evasion and enforcement to administrative tax return and audit data stemming from a large-scale experiment carried out by the Danish tax authorities. Chapter one (joint with J.V. Pinje) investigates the distributional consequences of tax evasion and optimal auditing and, in particular, the prediction that there will be a regressive bias in effective average tax rates compared to statutory rates. We find that this is in fact the case when looking at effective tax rates as a function of income not subject to information reporting by third parties. However, the tax authorities’ use of third party reports in their effort to combat tax evasion counteracts the regressive bias, resulting in no evidence of a bias when considering effective tax rates as a function of total income (third-party reported as well as self-reported).

In the second chapter (joint with J.V. Pinje) we estimate a structural model of tax evasion and enforcement and investigate the relative efficacy of tax authorities’ instruments to deter tax evasion. We find that instruments that work along the intensive margin of tax evasion (audits and penalty rates) are less effective than instruments that work along the extensive margin of tax evasion (third-party information reporting and the share of honest taxpayers in the population).

The final chapter (joint with W. Kopczuk and C.T. Kreiner) contributes to the literature on intergenerational mobility by studying wealth correlations across three generations of Danes using administrative data on wealth. We estimate the intergenerational wealth elasticity (IWE) and provide a theoretical framework to allow a deeper understanding of the nature of the IWE. The IWE can be interpreted as a weighted average of elasticities corresponding to particular sources of intergenerational correlation (e.g., intergenerational correlation in preferences or earnings capacity) and is not as such a deep parameter. We find evidence to suggest that parental wealth serves as a sufficient statistic for the effect of parental characteristics on child wealth. Finally, using data for three generations, we find that conventional child-parents IWE estimates severely underestimate the long-term persistence in the formation of wealth across generations.