Third-party reporting and employers' tax withholding are powerful compliance mechanisms, as long as the employer and employee do not collude to evade. Using data from randomly assigned on-site audits among 2,462 Norwegian firms, we provide evidence of collusive tax evasion. We find that firms...

Recently, there has been growing recognition that some formal employees receive from their formal employers two wages, namely an official declared wage plus an additional undeclared (envelope) wage, which reduces the tax and social contributions paid to the authorities. The aim of this paper is...