IDEAS home Printed from https://ideas.repec.org/a/bla/obuest/v65y2003i3p379-394.html
   My bibliography  Save this article

Does Tax Evasion Affect Occupational Choice?

Author

Listed:
  • Simon C. Parker

Abstract

This paper presents a novel micro‐econometric procedure that identifies the extent to which occupational choices are distorted by opportunities for tax evasion. Previous studies claim to have found significant and substantial effects, but analysis and replication of their methods reveals that they generate conflicting and misleading results. The paper then implements the new procedure using several British micro‐data sets. A thorough empirical investigation reveals that occupational choice between self‐employment and paid employment is not robustly related to pecuniary factors in general, and is invariant to tax avoidance and evasion opportunities in particular.

Suggested Citation

  • Simon C. Parker, 2003. "Does Tax Evasion Affect Occupational Choice?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 65(3), pages 379-394, July.
    • Handle: RePEc:bla:obuest:v:65:y:2003:i:3:p:379-394
    DOI: 10.1111/1468-0084.t01-1-00050
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/1468-0084.t01-1-00050
    Download Restriction: no
    File URL: https://libkey.io/10.1111/1468-0084.t01-1-00050?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Bruce, Donald, 2000. "Effects of the United States tax system on transitions into self-employment," Labour Economics, Elsevier, vol. 7(5), pages 545-574, September.
    2. Pestieau, Pierre & Possen, Uri, 1992. "How Do Taxes Affect Occupational Choice," Public Finance = Finances publiques, , vol. 47(1), pages 108-119.
    3. Gill, Andrew M, 1988. "Choice of Employment Status and the Wages of Employees and the Self-employed: Some Further Evidence," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 3(3), pages 229-234, July-Sept.
    4. Blanchflower, David G & Oswald, Andrew J, 1998. "What Makes an Entrepreneur?," Journal of Labor Economics, University of Chicago Press, vol. 16(1), pages 26-60, January.
    5. Taylor, Mark P, 1996. "Earnings, Independence or Unemployment: Why Become Self-Employed?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 58(2), pages 253-266, May.
    6. Frank A. Cowell, 1990. "Cheating the Government: The Economics of Evasion," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262532484, December.
    7. Pestieau, Pierre & Possen, Uri M., 1991. "Tax evasion and occupational choice," Journal of Public Economics, Elsevier, vol. 45(1), pages 107-125, June.
    8. Kihlstrom, Richard E. & Laffont, Jean-Jacques, 1983. "Taxation and risk taking in general equilibrium models with free entry," Journal of Public Economics, Elsevier, vol. 21(2), pages 159-181, July.
    9. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 31(3), pages 129-137.
    10. Kanbur, S M, 1979. "Of Risk Taking and the Personal Distribution of Income," Journal of Political Economy, University of Chicago Press, vol. 87(4), pages 769-797, August.
    11. Kanbur, S. M., 1981. "Risk taking and taxation : An alternative perspective," Journal of Public Economics, Elsevier, vol. 15(2), pages 163-184, April.
    12. Boadway, Robin & Marchand, Maurice & Pestieau, Pierre, 1991. "Optimal linear income taxation in models with occupational choice," Journal of Public Economics, Elsevier, vol. 46(2), pages 133-162, November.
    13. Parker, Simon C., 1999. "The optimal linear taxation of employment and self-employment incomes," Journal of Public Economics, Elsevier, vol. 73(1), pages 107-123, July.
    14. BOADWAY, Robin & MARCHAND, Maurice & PESTIEAU, Pierre, 1991. "Optimal linear income taxation in models with occupational choice," LIDAM Reprints CORE 958, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    15. Moresi, Serge, 1998. "Optimal taxation and firm formation:: A model of asymmetric information," European Economic Review, Elsevier, vol. 42(8), pages 1525-1551, September.
    16. PESTIEAU, Pierre & POSSEN, Uri, 1992. "How do taxes affect occupational choice?," LIDAM Reprints CORE 1007, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    17. Jung, Young H. & Snow, Arthur & Trandel, Gregory A., 1994. "Tax evasion and the size of the underground economy," Journal of Public Economics, Elsevier, vol. 54(3), pages 391-402, July.
    18. Watson, Harry, 1985. "Tax evasion and labor markets," Journal of Public Economics, Elsevier, vol. 27(2), pages 231-246, July.
    19. Richard Goode, 1949. "The Income Tax and the Supply of Labor," Journal of Political Economy, University of Chicago Press, vol. 57(5), pages 428-428.
    20. Martin T. Robson & Colin Wren, 1999. "Marginal and Average Tax Rates and the Incentive for Self-Employment," Southern Economic Journal, John Wiley & Sons, vol. 65(4), pages 757-773, April.
    21. Paul Baker, 1993. "Taxpayer compliance of the self-employed: estimates from household spending data," IFS Working Papers W93/14, Institute for Fiscal Studies.
    22. Barton H. Hamilton, 2000. "Does Entrepreneurship Pay? An Empirical Analysis of the Returns to Self-Employment," Journal of Political Economy, University of Chicago Press, vol. 108(3), pages 604-631, June.
    23. Black, Jane & de Meza, David, 1997. "Everyone may benefit from subsidising entry to risky occupations," Journal of Public Economics, Elsevier, vol. 66(3), pages 409-424, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Parker, Simon C., 1999. "The optimal linear taxation of employment and self-employment incomes," Journal of Public Economics, Elsevier, vol. 73(1), pages 107-123, July.
    2. Mikael Stenkula, 2012. "Taxation and entrepreneurship in a welfare state," Small Business Economics, Springer, vol. 39(1), pages 77-97, July.
    3. Florian Scheuer, 2014. "Entrepreneurial Taxation with Endogenous Entry," American Economic Journal: Economic Policy, American Economic Association, vol. 6(2), pages 126-163, May.
    4. Yannis Georgellis & Howard J. Wall, 2006. "Entrepreneurship and the policy environment," Review, Federal Reserve Bank of St. Louis, vol. 88(Mar), pages 95-112.
    5. Yannis Georgellis & Howard Wall, 2005. "Gender differences in self-employment," International Review of Applied Economics, Taylor & Francis Journals, vol. 19(3), pages 321-342.
    6. Hyytinen, Ari & Takalo, Tuomas, 2008. "Investor protection and business creation," International Review of Law and Economics, Elsevier, vol. 28(2), pages 113-122, June.
    7. Orkhan Nadirov & Bruce Dehning, 2020. "Tax Progressivity and Entrepreneurial Dynamics," Sustainability, MDPI, vol. 12(9), pages 1-21, April.
    8. Christiane Clemens, 2008. "Imperfect Competition and Growth with Entrepreneurial Risk," German Economic Review, Verein für Socialpolitik, vol. 9(2), pages 180-206, May.
    9. Thomas A. Garrett & Howard J. Wall, 2006. "Creating a Policy Environment for Entrepreneurs," Cato Journal, Cato Journal, Cato Institute, vol. 26(3), pages 525-552, Fall.
    10. Jean-François Wen & Cecilia García-Peñalosa, 2004. "Redistribution and Occupational Choice in a Schumpeterian Growth Model," CESifo Working Paper Series 1323, CESifo.
    11. Hans Gersbach & Ulrich Schetter & Maik T Schneider, 2019. "Taxation, Innovation and Entrepreneurship," The Economic Journal, Royal Economic Society, vol. 129(620), pages 1731-1781.
    12. Fugazza, Marco & Jacques, Jean-Francois, 2004. "Labor market institutions, taxation and the underground economy," Journal of Public Economics, Elsevier, vol. 88(1-2), pages 395-418, January.
    13. Paul A. Coomes & Jose Fernandez & Stephan F. Gohmann, 2013. "The Rate of Proprietorship Among Metropolitan Areas: The Impact of the Local Economic Environment and Capital Resources," Entrepreneurship Theory and Practice, , vol. 37(4), pages 745-770, July.
    14. Nadia Simoes & Nuno Crespo & Sandrina B. Moreira, 2016. "Individual Determinants Of Self-Employment Entry: What Do We Really Know?," Journal of Economic Surveys, Wiley Blackwell, vol. 30(4), pages 783-806, September.
    15. Ekelund, Jesper & Johansson, Edvard & Jarvelin, Marjo-Riitta & Lichtermann, Dirk, 2005. "Self-employment and risk aversion--evidence from psychological test data," Labour Economics, Elsevier, vol. 12(5), pages 649-659, October.
    16. Amelie Constant & Yochanan Shachmurove, 2005. "The comparison of incomes of self-employed and salaried workers among German Nationals and immigrants," PIER Working Paper Archive 05-030, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
    17. Agnar Sandmo, 2010. "Uncertainty in the Theory of Public Finance," The Geneva Risk and Insurance Review, Palgrave Macmillan;International Association for the Study of Insurance Economics (The Geneva Association), vol. 35(1), pages 1-18, June.
    18. Cecilia García-Peñalosa & Jean-François Wen, 2008. "Redistribution and entrepreneurship with Schumpeterian growth," Journal of Economic Growth, Springer, vol. 13(1), pages 57-80, March.
    19. Andreas Wagener, 2001. "Entrepreneurship and Social Security," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 57(3), pages 284-315, May.
    20. Semih Tumen, 2017. "Entrepreneurship in the shadows," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 25(2), pages 239-269, April.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:obuest:v:65:y:2003:i:3:p:379-394. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/sfeixuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.