Russia's flat tax reform: redefining its effects on employment

Iryna Kryvoruchko

Post-Communist Economies, 2015, vol. 27, issue 2, 188-204

Abstract: In 2001 Russia's Tax Department replaced a three-band progressive tax schedule with a flat personal income tax rate of 13%. This article evaluates the employment response to the flat income tax using the data from the Russia Longitudinal Monitoring Survey. With these data, employment can be classified along two dimensions: primary vs. secondary and official vs. unofficial. This article finds that individuals respond to lower taxes by devoting less time to secondary employment. Official and unofficial employment, on the other hand, remain unaffected by the flattening of the tax schedule. These results are robust to various specifications.

Date: 2015
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DOI: 10.1080/14631377.2015.1026689

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