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

Author

Listed:
  • Merike Kukk
  • Alari Paulus
  • Karsten Staehr

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

Suggested Citation

  • Merike Kukk & Alari Paulus & Karsten Staehr, 2019. "Income underreporting by the self-employed in Europe: a cross-country comparative study," Bank of Estonia Working Papers wp2018-04, Bank of Estonia, revised 23 Jan 2019.
    • Handle: RePEc:eea:boewps:wp2018-04
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    File URL: http://www.bankofestonia.info/pub/en/dokumendid/publikatsioonid/seeriad/uuringud//htpp://dx.doi.org/10.23656/25045520/042018/0156
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    Cited by:

    1. Merike Kukk & Alari Paulus & Karsten Staehr, 2020. "Cheating in Europe: underreporting of self-employment income in comparative perspective," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 27(2), pages 363-390, April.

    More about this item

    Keywords

    ncome underreporting; self-employment; EU countries; household budget surveys;
    All these keywords.

    JEL classification:

    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E26 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Informal Economy; Underground Economy
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies

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