This paper investigates the relation between taxation and the share of self-employed in two data sets. First, in a panel of OECD countries a strong negative correlation is found between the tax burden and the share of self-employed in total employment. Unfortunately the OECD data contains a number of measurement problems, and too few observations to allow a reliable detection of reverse causation. Therefore the analysis is complemented with regressions on the relation between the income tax and the share of self-employed using a panel of Swedish counties over the previous two decades. Here again there is a strong negative correlation between the tax burden and the share of self-employment. This survives simultaneous equations estimates and tests of Granger causality. Both samples indicate that reducing the tax burden by 10 percentage points (of GDP) increases the share of self-employed by about 3 percent of total employment. Copyright 2002 by Kluwer Academic Publishers
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 19 (2002) Issue (Month): 2 (September) Pages: 135-45 Download reference. The following formats are available: HTML
(with abstract),
plain text
(with abstract),
BibTeX,
RIS (EndNote, RefMan, ProCite),
ReDIF