Tax Enforcement in Developing Countries: Empirical Essays Using Tax Data from Ecuador

This dissertation exploits firm-level tax data from Ecuador to study tax enforcement issues that are of particular relevance for developing countries. Chapter II provides empirical evidence on the effects of higher punishment (both monetary and non-monetary) on corporate tax revenue. Data from Ecuador is analyzed, where in 2007 tax evasion became a felony (punishable with 1 to 6 years of prison) as the center-piece of a new tax enforcement regime. Chapter III provides empirical evidence on two additional issues in tax reform: (a) the role of better monitoring of large firms and (ii) possible complementarity between monitoring and punishment. The analysis relies on a regression discontinuity design (RD), exploiting the discontinuity in the selection process to the large taxpayer unit (LTU) in Ecuador. Chapter IV uses individual-level tax data to study the association between the day of birth and labor market outcomes during adulthood.