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Income underreporting by the self-employed in Europe: a cross-country comparative study

Merike Kukk, Alari Paulus () and Karsten Staehr ()

No wp2018-04, Bank of Estonia Working Papers from Bank of Estonia

Abstract: This study is the first to provide comparative estimates of the extent of income underreporting by the self-employed across countries in Europe. The estimates are derived using the consumption method developed by Pissarides & Weber (1989) and the data from the 2010 wave of the harmonised EU Household Budget Survey. The estimations show that the share of income not reported by the selfemployed is relatively large in many European countries, although with substantial variation across the countries. There is some regional clustering, but the shares of underreporting appear not to be related to the development level of the countries. The results are robust to changes in the model specification, the estimation method, and the choice of instruments, but are somewhat sensitive to sample restrictions and the criterion used to define self-employed households

Keywords: ncome underreporting; self-employment; EU countries; household budget surveys (search for similar items in EconPapers)
JEL-codes: H26 E21 E26 H24 (search for similar items in EconPapers)
Date: 2019-01-23, Revised 2019-01-23
New Economics Papers: this item is included in nep-iue and nep-mac
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