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Russia's flat tax reform: redefining its effects on employment

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  • Iryna Kryvoruchko

Abstract

In 2001 Russia's Tax Department replaced a three-band progressive tax schedule with a flat personal income tax rate of 13%. This article evaluates the employment response to the flat income tax using the data from the Russia Longitudinal Monitoring Survey. With these data, employment can be classified along two dimensions: primary vs. secondary and official vs. unofficial. This article finds that individuals respond to lower taxes by devoting less time to secondary employment. Official and unofficial employment, on the other hand, remain unaffected by the flattening of the tax schedule. These results are robust to various specifications.

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  • Iryna Kryvoruchko, 2015. "Russia's flat tax reform: redefining its effects on employment," Post-Communist Economies, Taylor & Francis Journals, vol. 27(2), pages 188-204, June.
    • Handle: RePEc:taf:pocoec:v:27:y:2015:i:2:p:188-204
    DOI: 10.1080/14631377.2015.1026689
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    References listed on IDEAS

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    1. Ceema Zahra Namazie, 2003. "The Effect of Unobservables on Labour Supply Decisions: The formal and informal sector during transition," CASE Papers 072, Centre for Analysis of Social Exclusion, LSE.
    2. Kolev, Alexandre, 1998. "Labour Supply in the Informal Economy in Russia during Transition," CEPR Discussion Papers 2024, C.E.P.R. Discussion Papers.
    3. Ceema Zahra Namazie, 2003. "The Effect of Unobservables on Labour Supply Decisions: The formal and informal sector during transition," CASE Papers case72, Centre for Analysis of Social Exclusion, LSE.
    4. Namazie, Ceema Zahra, 2003. "The effect of unobservables on labour supply decisions: the formal and informal sector during transition," LSE Research Online Documents on Economics 6329, London School of Economics and Political Science, LSE Library.
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