Within an economy, tax compliance behavior falls along a continuum. At one extreme are households who fully report and pay their tax obligations despite any opportunities or incentives to cheat. At the other extreme are households who undertake considerable efforts to conceal their income and...

There are by now vast academic literatures on both tax compliance and the underground economy. These literatures provide estimates of the overall degrees of non-compliance and shadow (or hidden) activity as well as numerous insights into their causes and consequences. However, we believe it is...