Abstract |
This paper examines the relationship between working in the formal or informal sector and subjective welfare in a country in transition. It does so by allowing for individual heterogeneity in attitudes towards taxes. The results indicate that, for most individuals, working in the informal sector has negative effects on their subjective welfare. For some individuals, however, this effect is positive. The differentiating characteristic of the latter group is their low private tax morale, i.e, they disagree that not paying taxes today has personal financial repercussions in the future. |