nep-pub New Economics Papers
on Public Finance
Issue of 2021‒05‒10
three papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Tax Progressivity and Self-employment Dynamics By Wiji Arulampalam; Andrea Papini
  2. Marginal tax changes with risky investment By Patrick Macnamara; Myroslav Pidkuyko; Raffaele Rossi
  3. Labor Market Institutions and the Incidence of Payroll Taxation By Kim, Jinyoung; Kim, Seonghoon; Koh, Kanghyock

  1. By: Wiji Arulampalam; Andrea Papini (European Commission - JRC)
    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%.
    Keywords: Tax progressivity; Income tax; Self-employment; Duration analysis.
    JEL: H24 H25 J24 C41
    Date: 2021–05
  2. By: Patrick Macnamara; Myroslav Pidkuyko; Raffaele Rossi
    Date: 2021
  3. By: Kim, Jinyoung (Korea University); Kim, Seonghoon (Singapore Management University); Koh, Kanghyock (Korea University)
    Abstract: Despite unambiguous predictions of the canonical model of a competitive labor market, empirical studies on the labor market effects of payroll taxation provide conflicting evidence. Our meta-analysis shows that varying degrees of labor market competitiveness across places and time could be one explanation for the mixed results. We then estimate the labor market impacts of payroll taxation in Singapore, the country with most competitive and flexible labor market among the countries investigated in the literature. By exploiting the sharp reduction in payroll tax rate when workers turn 60, we find that the payroll tax cut in Singapore has a large effect on wages without changes in employment. We provide novel evidence corroborating the canonical model prediction that the welfare costs of social insurance programs financed by payroll taxes can be minimized in a competitive labor market.
    Keywords: payroll tax, labor market outcomes, incidence, regression discontinuity design, meta-analysis, labor market competitiveness
    JEL: H24 I31 J22
    Date: 2021–04

This nep-pub issue is ©2021 by Kwang Soo Cheong. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.