IDEAS home Printed from https://ideas.repec.org/p/ssb/dispap/1000.html
   My bibliography  Save this paper

Controlling for fixed effects in studies of income underreporting

Author

Listed:

Abstract

The expenditure method of Pissarides and Weber (1989) [Journal of Public Economics, 39 (1), 17-32) shows how one backs out measure of income underreporting by the self-employed by using food consumption as trace of true income. In this paper we make a case for using panel data and fixed effects estimation in such analysis, instead of OLS estimation. The main argument is that fixed effects estimation addresses the problem of omitted variable bias in the identification. We demonstrate the use of panel data and fixed effects estimation by using large scale administrative register data on charitable donations, exploiting that the data can be turned into a panel dataset. The results suggest that the estimation technique matters – fixed effects estimates are smaller than OLS estimates.

Suggested Citation

  • Odd E. Nygård & Thor O. Thoresen, 2023. "Controlling for fixed effects in studies of income underreporting," Discussion Papers 1000, Statistics Norway, Research Department.
    • Handle: RePEc:ssb:dispap:1000
    as

    Download full text from publisher

    File URL: https://www.ssb.no/en/inntekt-og-forbruk/inntekt-og-formue/artikler/controlling-for-fixed-effects-in-studies-of-income-underreporting/_/attachment/inline/03288122-3490-4b68-a004-88aa8dd3c58e:97a788c76477c5ab2c049abb98d6751e70a8e305/DP1000_web.pdf
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    Income underreporting; register data; expenditure approach; fixed effects estimation;
    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
    • C55 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Large Data Sets: Modeling and Analysis

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:ssb:dispap:1000. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: L Maasø (email available below). General contact details of provider: https://edirc.repec.org/data/ssbgvno.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.