Estimating the Income Reporting Function for the Self-Employed
AbstractThere is considerable interest in measuring the underground economy using microeconomic data. One such method estimates income under-reporting by households by assuming a known, parametric form of the Engel curve and making the further parametric assumption that households under-report their income by a constant fraction, independent of income. This paper proposes a nonparametric approach which avoids functional form restrictions and enables the reporting function to vary across income levels and household characteristics. I illustrate by estimating the effect of the Canadian Goods and Services Tax on income under-reporting.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 4212.
Date of creation: Jul 2007
Date of revision:
Underground Economy; Income Under-reporting; Nonparametric Estimation; Engel Curve;
Other versions of this item:
- Lindsay Tedds, 2010. "Estimating the income reporting function for the self-employed," Empirical Economics, Springer, vol. 38(3), pages 669-687, June.
- D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
- C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
- O17 - Economic Development, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-07-27 (All new papers)
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