Social Identities, Ethnic Diversity, and Tax Morale

33 Pages Posted: 18 Jun 2009

See all articles by Sherry Xin Li

Sherry Xin Li

University of Texas at Dallas

Date Written: June 18, 2009

Abstract

This paper investigates the impact of individuals' social identity on their tax attitudes, and how these effects on the micro level are translated to an impact of ethnic heterogeneity on the public's 'overall' tax morale. We find that both racial and national identities play important roles shaping one's tax morale, and their effects depend on the population heterogeneity. Overall, ethnically fractionalized countries have poorer tax morale than homogeneous ones. It implies that the former are more likely to have a higher cost of tax collection, which may restrict funds for their public sector and adversely affect its functionality. This is consistent with the previous findings that suggest detrimental impact of ethnic fractionalization on public sector performance.

Keywords: social identity, ethnic fragmentation, tax morale, tax compliance

JEL Classification: D64, H26, J15, Z1

Suggested Citation

Li, Sherry Xin, Social Identities, Ethnic Diversity, and Tax Morale (June 18, 2009). Available at SSRN: https://ssrn.com/abstract=1422121 or http://dx.doi.org/10.2139/ssrn.1422121

Sherry Xin Li (Contact Author)

University of Texas at Dallas ( email )

2601 North Floyd Road
Richardson, TX 75083
United States

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