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The Developmnet of the Self-employed Sector in the Czech Republic in the Years 2006 - 2010

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  • Tomas Pavlicek

    () (University of Economics, Prague/Department of Economic and Social Policy)

Abstract

The aim of the article is to analyse the short term economic factors behind the growth in the number of self-employed in the Czech Republic in the period from 2006 to 2010. The article describes the main legislature changes, which affected self-employment, estimates the flows between the self-employment and the wage labour market and evaluates the development of paid tax revenue in relation to the two profit indicators - tax base and mixed income. It is shown that the economic downturn in 2009 negatively influenced the profits, however the main reason for the fall in income tax revenue is the change in legislature. In this context the two hypotheses about the short term motives for self-employment are discussed - the tax optimization and the second choice in difficult labour market situation. Based on macro level analysis the rate of unemployment is suggested as a dominant short term factor in the observed period. The change in effective tax rate does not correspond with the short term change of the self-employed numbers - the difference in the burden between employed and self-employed has a long term effect. However the changes in the rules for costs declared by percentage likely played a role as an administrative barrier removal. The article does not consider long term and non-economic factors as well as the difficult to measure tax and labour law enforcement which are suggested for further analysis.

Suggested Citation

  • Tomas Pavlicek, 2014. "The Developmnet of the Self-employed Sector in the Czech Republic in the Years 2006 - 2010," ACTA VSFS, University of Finance and Administration, vol. 8(1), pages 28-46.
  • Handle: RePEc:prf:journl:v:8:y:2014:i:1:p:28-46
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    File URL: http://www.vsfs.cz/periodika/acta-2014-01.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    self-employment; self-employed; labour market; unemployment; tax revenue; economic downturn;

    JEL classification:

    • J4 - Labor and Demographic Economics - - Particular Labor Markets
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents

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