![](https://tinbergen.nl/media/cache/publication_detail/media/publication/image/192e63663596817da9a496c097e7f7cf_f09fde2338c952dc327bde5d98b1f555_0034-6535.jpg)
Zhou, F. and Oostendorp, R. (2014). Measuring True Sales and Underreporting with Matched Firm-Level Survey and Tax-Office Data Review of Economics and Statistics, 96(3):563--576.
-
Affiliated authorsRemco Oostendorp, Fujin Zhou
-
Publication year2014
-
JournalReview of Economics and Statistics
This paper uses firm-level survey data matched with official tax records to estimate the unobserved true sales of formal firms in Mongolia. Taking into account firm-level incentives to comply with taxes and a production function technology linking unobserved true sales with observable firm-level production characteristics, we derive a multipleindicators, multiple-causes model predicting true sales. We find that firms underreport sales to the tax office by 38.6%, but firm-level survey data also suffer from significant underreporting. Finally, we compare our approach with two alternative approaches of measuring underreporting and discuss the practical implications of the findings for firm-level analyses of underreporting.