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Tax Progressivity and Self-Employment Dynamics

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  • Arulampalam. Wiji

    (Department of Economics,University of Warwick)

  • Papini, Andrea

    (ISER, University of Essex)

Abstract

Analysis of the relationship between taxes and self-employment should account for the interplay between responses in self-employment and wage employment. To this end, we estimate a two-state multi-spell duration model which accounts for both observed and unobserved heterogeneity using a large longitudinal administrative dataset for Norway for 1993-2011. Our findings confirm theoretical predictions, and are robust to various changes to de nitions and sample selections. A policy experiment simulating a fl atter tax schedule in the year 2000, is found to encourage both entry into and exit from self-employment, with an increase of about 11.5 percent innet in flow into self-employment.

Suggested Citation

  • Arulampalam. Wiji & Papini, Andrea, 2018. "Tax Progressivity and Self-Employment Dynamics," The Warwick Economics Research Paper Series (TWERPS) 1169, University of Warwick, Department of Economics.
    • Handle: RePEc:wrk:warwec:1169
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    Cited by:

    1. Ábrahám, Árpád & Gottardi, Piero & Hubmer, Joachim & Mayr, Lukas, 2023. "Tax wedges, financial frictions and misallocation," Journal of Public Economics, Elsevier, vol. 227(C).
    2. Can, Ege & Fossen, Frank M., 2023. "Income Taxation and Hours Worked in Different Types of Entrepreneurship," IZA Discussion Papers 16683, Institute of Labor Economics (IZA).
    3. Orkhan Nadirov & Bruce Dehning, 2020. "Tax Progressivity and Entrepreneurial Dynamics," Sustainability, MDPI, vol. 12(9), pages 1-21, April.
    4. Ege Can, 2022. "Income taxation, entrepreneurship, and incorporation status of self-employment," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 29(5), pages 1260-1293, October.
    5. Gregory T. Papanikos, 2024. "Variations of Self-Employed in Eurozone Countries: The Role of Corruption and Wage Rate Growth," Athens Journal of Business & Economics, Athens Institute for Education and Research (ATINER), vol. 10(1), pages 9-18, January.

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    More about this item

    Keywords

    Tax progressivity ; Income tax ; Self-employment;
    All these keywords.

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies

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