Type
Working paper
Titre
Taxation and Self-Employment
Dans
Sciences Po Economics Discussion Papers
Éditeur
Paris : Département d'économie de Sciences Po
Collection
Sciences Po Economics Discussion Papers : 2018-02
Mots clés
Tax-rates, Self-employment, Tax evasion
Résumé
EN
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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