Using Panel Data to Exactly Estimate Income Under-Reporting by the Self Employed

Bonggeun Kim (), John Gibson and Chul Chung ()
Additional contact information
Bonggeun Kim: Hanyang University - Economics
Chul Chung: Korea Institute for International Economic Policy

No 09-2, Working Papers from Korea Institute for International Economic Policy

Abstract: The income of the self-employed is often assumed to be understated in economic statistics. Controversy exists about the best method for estimating the extent of under-reporting and about the resulting measures of the size of the underground economy. This paper refines a method developed by Pissarides and Weber (1989) and uses discrepancies between food shares and reported incomes of the self-employed and other households to estimate under-reporting by the self-employed. In contrast to previous studies our panel data methodology distinguishes income under-reporting from transitory income fluctuations of the selfemployed, and provides an exact estimate of the degree of underreporting rather than just an interval estimate. Using panel data from Korea and Russia we estimate that 38 percent of the income of selfemployed households in Korea and 47 percent of the income of Russian self-employed households is not reported.

Keywords: Engel Curve; Measurement Error; Self-Employment; Underground Economy (search for similar items in EconPapers)
JEL-codes: C43 E31 (search for similar items in EconPapers)
Pages: 53 pages
Date: 2009-06-10
References: Add references at CitEc
Citations: View citations in EconPapers (14)

Downloads: (external link)
https://ssrn.com/abstract=2955471 Full text (application/pdf)

Related works:
Working Paper: Using Panel Data to Exactly Estimate Income Under-Reporting by the Self Employed (2009)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ris:kiepwp:2009_002

Access Statistics for this paper

More papers in Working Papers from Korea Institute for International Economic Policy [30147] 3rd Floor Building C Sejong National Research Complex 370 Sicheong-daero Sejong-si, Korea. Contact information at EDIRC.
Bibliographic data for series maintained by Juwon Seo ( this e-mail address is bad, please contact ).