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 to 2011. Our findings confirm theoretical predictions, and are robust to various changes to denitions and sample selections. A policy experiment simulating a flatter tax schedule in the year 2000 is found to encourage self-employment, delivering a net increase of predicted inflow into self-employment from 2.8% to 5.3%.
ARULAMPALAM Wiji;
PAPINI Andrea;
2023-03-08
MIT PRESS
JRC124699
0034-6535 (online),
https://direct.mit.edu/rest/article/105/2/376/100980/Tax-Progressivity-and-Self-Employment-Dynamics,
https://publications.jrc.ec.europa.eu/repository/handle/JRC124699,
10.1162/rest_a_01046 (online),
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