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Tax Progressivity and Self-employment Dynamics

Wiji Arulampalam () and Andrea Papini ()

No 2021-03, JRC Working Papers on Taxation & Structural Reforms from Joint Research Centre (Seville site)

Abstract: Analysis of the relationship between taxes and self-employment should account for the interplay between responses in self-employment and wage employment. To this end, we estimate a two-state multi-spell duration model which accounts for both observed and unobserved heterogeneity using a large longitudinal administrative dataset for Norway for 1993 to 2011. Our findings confirm theoretical predictions, and are robust to various changes to definitions and sample selections. A policy experiment simulating a flatter tax schedule in the year 2000 is found to encourage self-employment, delivering a net increase of predicted inflow into self-employment from 2.8% to 5.3%.

Keywords: Tax progressivity; Income tax; Self-employment; Duration analysis. (search for similar items in EconPapers)
JEL-codes: C41 H24 H25 J24 (search for similar items in EconPapers)
Date: 2021-05
New Economics Papers: this item is included in nep-ent, nep-lma, nep-pbe and nep-pub
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Related works:
Working Paper: Tax Progressivity and Self-Employment Dynamics (2021) Downloads
Working Paper: Tax Progressivity and Self-Employment Dynamics (2018) Downloads
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