Tax evasion in transition: Outcome of an institutional clash? - Testing Feige's conjecture

A field survey of households was conducted in Tirana, Albania in 2000. A response rate of 89.3% yielded 1.340 valid questionnaires, allowing us to test Feige’s (1997) conjecture that more tax evasion will be observed, when formal and informal institutions clash. Respondents’ attitudes towards formal and informal institutions were obtained by applying factor analysis to the responses to a series of attitudinal questions. The results of the analysis support Feige’s conjecture. An important implication is that when studying tax evasion one should take country specific institutions (and their interaction) into account.