International Tax and Public Finance

, Volume 24, Issue 1, pp 112–133 | Cite as

Re-assessing the merits of measuring tax evasion through business surveys: an application of the crosswise model

  • Thorben C. Kundt
  • Florian Misch
  • Birger Nerré


Self-assessments by respondents in surveys are often the only available measure of tax evasion in developing countries at the microeconomic level. However, they suffer from the reluctance of respondents to reveal their own illicit behavior. This paper evaluates whether this weakness of self-assessments can at least partially be overcome through a novel questioning method, the crosswise model, which allows estimating the prevalence of tax evasion, but not identifying whether the individual respondent engages in tax evasion or not. Using evidence from Serbia, we show that crosswise model-based estimates of the share of firms which significantly underreport sales exceed those obtained from conventional methods by around 10 % points or more. With respect to wage underreporting to evade payroll tax and social security contributions, we do not find differences. These results appear to be robust to a number of modifications, and we explore various potential causes that lead to these results.


Tax evasion Shadow economy Measurement Survey methodology 

JEL Classification

C83 H26 O17 



We thank Aleksandar Dragojlović, Friedrich Heinemann, Anders D. Jensen, Lars Kunze, Friedrich Schneider and participants of the 2013 Shadow Economy conference and of 69th IIPF Annual Congress for excellent comments. The views expressed in this paper are the sole responsibility of the authors and do not necessarily reflect those of the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, a German aid agency, and those of the German Federal Ministry for Economic Cooperation (Bundesministerium für wirtschaftliche Zusammenarbeit und Entwicklung, BMZ). The views expressed in this paper should not be attributed to the IMF, its Executive Board, or its management. The survey underlying this paper was carried out by the “Public finance reform project in Serbia” which is implemented by GIZ on behalf of BMZ. We also thank Mark Trappmann who implicitly suggested applying the crosswise model to study tax evasion in his presentation at the 1st Friedrich-Alexander University Nuremberg-Erlangen (FAU) Workshop on Tax Compliance 2012.

Supplementary material

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Supplementary material 1 (pdf 270 KB)


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Copyright information

© International Monetary Fund, Washington, DC 2016

Authors and Affiliations

  • Thorben C. Kundt
    • 1
  • Florian Misch
    • 2
  • Birger Nerré
    • 3
  1. 1.Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbHBonnGermany
  2. 2.International Monetary FundWashingtonUSA
  3. 3.Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbHBelgradeSerbia

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