Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/236394 
Year of Publication: 
2021
Series/Report no.: 
IZA Discussion Papers No. 14363
Publisher: 
Institute of Labor Economics (IZA), Bonn
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 to 2011. Our findings confirm theoretical predictions, and are robust to various changes to definitions 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%.
Subjects: 
tax progressivity
income tax
self-employment
duration analysis
JEL: 
H24
H25
J24
C41
Document Type: 
Working Paper

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