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Preprints, Working Papers, ... Year : 2018

Taxation and Self-Employment

Zsofia Barany


In this paper I study the relation between self-employment and the tax rates on wages and on self-employment income. Using variation in the statutory tax rates across countries, industries, and occupations, I find that while the share of self-employed is strongly positively correlated with the tax rate on wage income, it is weakly negatively correlated with the tax rate on self-employed income. The asymmetry between the effects of the tax rates suggests that those who choose self-employment partly do so in order to evade taxes. This extensive margin of adjustment – between employment and self-employment – should be taken into account when considering the effects of tax rates on labor income, on taxable income and on welfare.
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hal-03393144 , version 1 (21-10-2021)


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Zsofia Barany. Taxation and Self-Employment. 2018. ⟨hal-03393144⟩
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