Effects of Taxes on Youth Self-Employment and Income

42 Pages Posted: 20 Apr 2016

See all articles by Johan Egebark

Johan Egebark

Research Institute of Industrial Economics (IFN)

Date Written: March 1, 2016

Abstract

I study the link between taxes and youth self-employment. I make use of a Swedish reform, implemented in 2007-09, which suddenly made the payroll tax and the self-employment tax vary by age. The results suggest that youth self-employment is insensitive to tax reductions, both in the short run and in the somewhat longer run. I also study the effect of the tax reductions on income. For those that are defined as self-employed, I find positive effects on income from self-employment, and negative effects on income from wage employment. This finding suggests that the lower taxes caused the self-employed to reallocate time from employment to self-employment.

Keywords: Youth unemployment, Self-employment tax, Tax subsidy, Self-employment

JEL Classification: H25, H32, J23, J38, J68

Suggested Citation

Egebark, Johan, Effects of Taxes on Youth Self-Employment and Income (March 1, 2016). IFN Working Paper No. 1117. Available at SSRN: https://ssrn.com/abstract=2766582 or http://dx.doi.org/10.2139/ssrn.2766582

Johan Egebark (Contact Author)

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

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