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Estimating Self-Employment Income-Gaps from Register and Survey Data: Evidence for New Zealand

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dc.contributor.author Cabral, Ana Cinta G.
dc.contributor.author Gemmell, Norman
dc.date.accessioned 2018-08-15T22:37:58Z
dc.date.accessioned 2022-07-11T23:01:58Z
dc.date.available 2018-08-15T22:37:58Z
dc.date.available 2022-07-11T23:01:58Z
dc.date.copyright 2018
dc.date.issued 2018
dc.identifier.uri https://ir.wgtn.ac.nz/handle/123456789/20833
dc.description.abstract This paper provides estimates of the income-gap of the self-employed – defined as the proportion of undeclared to true income – in New Zealand using traces of expenditure to infer true income holdings following the approach of Pissarides and Weber (1989) and Feldman and Slemrod (2007). This uses the relationship between expenditure and income for the employed (with lower opportunities to evade) to infer the true income of the self-employed.We use a unique dataset – New Zealand’s Integrated Data Infrastructure (IDI) – that matches individual data including incomes and expenditures from the Household Economic Survey with register incomes declared to the tax administration. This has several advantages in our context. Firstly, register data minimises income measurement error by employed and self-employed as it does not rely on accurate recall by survey participants. Secondly, the approach allows us to measure evasion under different incentives for misreporting. We estimate that the self-employed underreport on average around 20% of their income (with a 95% confidence interval around 10-30%), and that the income-gap varies significantly by gender and region. Our results are also found to be highly robust to a range of sensitivity tests for measurement error. en_NZ
dc.format pdf en_NZ
dc.language.iso en_NZ
dc.publisher Te Herenga Waka—Victoria University of Wellington en_NZ
dc.relation.ispartofseries Working Papers in Public Finance ; 07/2018 en_NZ
dc.subject Tax evasion en_NZ
dc.subject Shadow economy en_NZ
dc.subject Income underreporting en_NZ
dc.subject Self-employed en_NZ
dc.title Estimating Self-Employment Income-Gaps from Register and Survey Data: Evidence for New Zealand en_NZ
dc.type Text en_NZ
vuwschema.contributor.unit School of Accounting and Commercial Law en_NZ
vuwschema.subject.anzsrcfor 140215 Public Economics - Taxation and Revenue en_NZ
vuwschema.type.vuw Working or Occasional Paper en_NZ
vuwschema.subject.anzsrcforV2 380115 Public economics - taxation and revenue en_NZ
dc.rights.rightsholder www.victoria.ac.nz/sacl/about/cpf en_NZ

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