Gideon Yaniv

Withholding and non-withheld tax evasion

Abstract Most of the literature on tax evasion and labor supply ignores the fact that the major part of a wage-earners tax liability is usually deducted at source by withholding regulations. However, while eliminating a single job holders option of evading taxes through underreporting, a withholding system might give rise to evasion of non-withheld taxes through non-filing of individual returns, as well as induce employers to remit to the government less than the amounts withheld. This paper investigates the employer and employee tax fraud activity under a withholding system and the systems effect on the amount of tax escaping the tax collector.

Minimum Wage Noncompliance and the Employment Decision

The employment effects of minimum wage noncompliance have been the focus of several theoretical contributions to the minimum wage literature, the dominating conclusion being that the noncomplying employer, while reducing employment below the free‐market level, will still employ more labor than he would if complying. Allowing, however, for partial compliance, this study applies a portfolio‐choice approach to the employer’s problem, concluding surprisingly that the minimum wage law may give rise to a full‐compliance employment effect even if it is partially evaded. This result is further shown to hold with regard to labor market laws in general.

Burnout, absenteeism, and the overtime decision

Abstract Although bearing major personal, organizational and social costs, ‘burnout’ stress syndromes, the consequence of continuing high levels of job stress, have failed so far to attract any analytical economic treatment. This paper constructs a simple model of the burnout process, deriving a positive relationship between absenteeism (due to the depletion of emotional and mental resources) and overemployment under stress conditions. Applying this connection to the firms cost-minimization problem, the paper shows that burnout-induced absences produce a kink in the labor cost function, as a result of which the firm will employ less overtime per worker and more workers in the presence of absenteeism than in its absence. This result substantially modifies Ehrenbergs (1970) conclusion that a rational economic response to a certain (and exogenous) absentee rate involves increasing overtime per employee, while the effect on the number of workers is ambiguous.

Tax Evasion, Risky Laundering, and Optimal Deterrence Policy

This paper extends the Allingham and Sandmos (1972) model of income tax evasion to take account of laundering opportunities, allowing the taxpayer to determine not only the amount of actual income to declare but also the amount of undeclared income to launder. Laundering, aside of entailing direct costs, is assumed to be an unlawful activity, subject to the risk of detection and punishment. The tax authorities devote separate resource efforts to initial audits which may detect undeclared income that has not been laundered and to in-depth investigation which may detect undeclared income that has been laundered. The paper analyzes the effects of laundering incentives on evasion and derives guidelines for the optimal design of a joint evasion/laundering deterrence policy.

Tax evasion under differential taxation: The economics of income source misreporting

Abstract If different income sources are subject to different rates of taxation, a taxpayer may find it worthwhile to evade taxes by declaring part of his higher-taxed income as stemming from a lower-taxed source. This paper inquires into the determinants of income source misreporting, focusing on the relationships between misreporting and taxation under alternative penalty schemes. Allowing the taxpayer the choice between source misreporting and pure underreporting, the paper examines also the relative amount of tax escaping the tax collector through the alternative forms of evasion and determines the conditions under which one will be preferred to the other.

Fraudulent collection of unemployment benefits: A theoretical analysis with reference to income tax evasion

Abstract The harshest abusers of the unemployment insurance program are those employed who collect benefits while working. This paper analyzes fraudulent claiming behavior and optimal deterrence policy under two alternative penalty schemes, commonly used in tax evasion analyses: one relates punishment to the magnitude of the dishonesty, whereas the other relates punishment to the amount of illegal returns. Two exclusive features of fraudulent benefit claiming are given special attention: the requirement to report at a labor exchange to demonstrate availability for work, and the need to serve a waiting period before benefits can be collected.

Suicide intention and suicide prevention: an economic perspective

Abstract Suicide has long been recognized as a major public health problem. Suicide prevention, through the provision of ambulatory crisis therapy which, if successful, eliminates the desire to die, or through protective hospitalization which, first and foremost, eliminates the opportunities, is thus part of society’s resource allocation problem. A prerequisite for undertaking either of these measures is that suicide-contemplating individuals apply for help. The present paper addresses the individual’s problem of whether to commit suicide or to apply for last-minute help, as well as the mental health practitioner’s problem of whether to hospitalize a suicide-threatening individual or to offer him ambulatory crisis therapy. While the individual faces the risk of involuntary hospitalization, the practitioner faces the risk of suicide. Acting as a cost-oriented social welfare agent, the practitioner bases his decision on the likelihood that the suicide threat is genuine, so as to minimize society’s expected loss from suicide and suicide-prevention efforts. The paper analyzes the interaction between the suicidal individual and the mental health practitioner within a simple game-theoretic framework, deriving both parties’ equilibrium strategies as well as implications for public health policy aimed at enhancing help-seeking behavior.

Withholding Information from Cancer Patients as a Physician's Decision under Risk

When cancer is diagnosed, the physician may face a dilemma regarding disclosure of information to the patient. While he or she may feel a responsibility to maintain the patients hope, even through the withholding of information, there is a risk involved: if treatment fails, the patient will eventually know the truth. Patients who would rather live their final days in peace rather than undergo unpleasant treatment of an uncertain nature may be furious and frustrated that they have been deprived of this liberty, ending their lives feeling worse than they would have had they been told the truth at the outset. The author applies three theories of decision making under uncertamty (expected utility theory, prospect theory, and regret theory) to the physicians problem of whether and to what extent to withhold information from a cancer patient, deriving comparative predictions with regard to the relationships between the physicians behavior and illness, patient, and physician characteristics. The results help explain why physicians whose norm of behavior is full disclosure sometimes opt to withhold information and why junior physicians are more likely to disclose the truth than their senior colleagues, as well as the empirical findings that physicians tend to disclose more truthful information to patients the greater the severity of illness and the more inquisitive the patient. Key words: cancer patient; information disclosure/withholding; risk/uncertamty; expected-utility theory; prospect theory; regret theory. (Med Decis Making 2000;20: 216-227)

Unemployment insurance benefits and the supply of labor of an employed worker

Abstract The unemployment insurance program is believed to adversely affect the supply of labor of the unemployed. Yet, it generates favorable incentives for the employed. Since unemployment benefits are aimed to compensate the unemployed for earnings loss, of which past earnings serve as a practical measure, a worker might choose to increase his efforts when employed, insuring himself partially against future unemployment. However, this possible impact on labor supply has escaped any attention until very recently. Incorporating an earnings-related benefits scheme into a multi-period decision model, the present paper investigates the labor supply behavior of an insured worker over time.

Absenteeism and the risk of involuntary unemployment: A dynamic analysis

Abstract Absence from work is a risky activity for an employed worker, as it may lead to dismissal and involuntary unemployment. The cost of unemployment to a worker depends, however, on absence behavior had the worker remained employed. Hence, absence decisions over time are interrelated. This article examines the dynamic and some comparative static aspects of the absence decision under uncertainty: the nature of its variation over time, its response to variations in the unemployment rate, and its alleged subjection to a moral hazard effect in the presence of an unemployment insurance program.