Tax Evasion, Technological Progress and R&D Expdenditure: Theory and Empirical Evidence

Maria Rosaria Alfano, Salvatore Capasso, Salvatore Ciucci, Nicola Spagnolo

DOI: 10.36134/CNRDSUWP-2025-3 Download as .PDF

This paper introduces a novel theory of tax evasion, suggesting that the optimal decision to evade taxes is influenced by agents’ portfolio technologies. The theory argues that evading taxes involves the use of specific production technologies (“hidden technologies”) with returns that differ from those of technologies that require tax compliance (“visible technologies”). As technological progress affects the gap and returns between these types of production technologies, the optimal level of tax evasion shifts. Furthermore, considering social customs, the paper concludes that the overall level of tax evasion is determined by the prevalent nature of technologies in the economy. This theory is empirically tested using a panel cointegration framework, analysing data from 67 countries between 2001 and 2020 to ensure broad relevance. The empirical results confirm the theoretical model, even when accounting for variations in R&D expenditure levels.

How to cite

Alfano M.R., Capasso S., Ciucci S., Spanolo N, (2025). Tax Evasion, Technological Progress and R&D Expdenditure: Theory and Empirical Evidence (CNR-DSU Working Paper 3-25). CNR-Dipartimento di Scienze Umane e Sociali, Patrimonio culturale. https://doi.org/10.36134/CNRDSUWP-2025-3.

Last updated: 19 January 2026