Tax Progressivity and Self-Employment Dynamics

Wiji Arulampalam and Andrea Papini

No 14363, IZA Discussion Papers from Institute of Labor Economics (IZA)

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: self-employment; income tax; tax progressivity; duration analysis (search for similar items in EconPapers)
JEL-codes: C41 H24 H25 J24 (search for similar items in EconPapers)
Pages: 72 pages
Date: 2021-05
New Economics Papers: this item is included in nep-ent, nep-lma and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Published - published in: Review of Economics and Statistics, 2023, 105 (2), 377 - 391

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Related works:
Journal Article: Tax Progressivity and Self-Employment Dynamics (2023)
Working Paper: Tax Progressivity and Self-employment Dynamics (2021)
Working Paper: Tax Progressivity and Self-Employment Dynamics (2018)
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