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KMID : 1124020140300040085
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Korean Social Security Studies
2014 Volume.30 No. 4 p.85 ~ p.118
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An Estimation of Income Under-reporting and related Contribution Evasion to the National Pens
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Shin Kyu-Soo
Hong Baeg-Eui
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Abstract
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The purpose of this study is to analyze the level of contribution evasion by under-reporting income to the National Pension Service using National Panel of Tax and Benefit data. In this process of estimation, we applied the framework of shadow economy to understand the characteristics of contribution evasion. The size of shadow economy from the contribution evasion varies to monthly tax-free amount in the payroll tax and changes whether the business earner’s under-reporting ratio to the survey is reflected or not. If the average tax-free amount is two hundred thousand won, the under-reporting ratio of the worker will be 19.32% based on total. But that of the business earner is very large compared to the worker` s. Even if we don` t apply the under-reporting to the survey, the size of business earner` s contribution evasion as a shadow economy reaches up to 56.41% and rises up to 61.03% of their income when it is applied. Therefore we can reaffirm the severity of business earner` s contribution evasion. Nevertheless this study has a meaning that it` s the first estimation of National Pension` s contribution evasion which is analyzed empirically from the perspective of shadow economy.
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KEYWORD
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National Pension, contribution evasion, shadow economy
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