Flat tax system and heterogeneity of self-employment

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Sherzodbek Safarov ◽  
Dilnovoz Abdurazzakova
Keyword(s):  
Logit Model ◽  
Occupational Choice ◽  
Second Step ◽  
Tax System ◽  
Flat Tax ◽  
Content Type ◽  
Self Employment ◽  
Dependent Variables ◽  
Wage Employment ◽  
Number Of Individuals

Purpose This paper aims to investigate the effect of the flat tax system on self-employment by necessity and by opportunity. Specifically, the paper examines whether individuals decide to switch from wage-employment to self-employment by necessity or by opportunity when government imposes a flat tax system. Design/methodology/approach To analyze the association of a flat tax system with occupational choice this paper uses both multinomial and ordinary logit models. In the multi-nominal logit model, this study separates dependent variables into three categories: wage employee, self-employed by necessity and self-employed by opportunity. In the second step of analyzes using the ordinary logit model, this paper studies only self-employed individuals by distinguishing them according to their preferences. Findings The results suggest that, in countries with the imposed flat tax system, the probability of being self-employed by necessity is low, while the probability of being self-employed by opportunity is high. Moreover, better economic growth in the country also elevates the chances of individuals to be self-employed by opportunity. Originality/value Out novel contribution is documenting that flat tax system in transition countries increases the number of individuals self-employed by opportunity compared to self-employed by necessity.

The impact of transitions into wage-employment for satisfied and unsatisfied entrepreneurs

2016 ◽  
Vol 22 (3) ◽  
pp. 375-397 ◽  
Author(s):  
Jochen Mattes
Keyword(s):  
Unobserved Heterogeneity ◽  
Emotional Life ◽  
Content Type ◽  
Social And Emotional ◽  
Self Employment ◽  
Family Balance ◽  
Wage Employment ◽  
Nationally Representative ◽  
Work Family ◽  
The Impact

Purpose – Should unsatisfied/satisfied entrepreneurs transition into wage-employment? The purpose of this paper is to investigate the financial, physical, social and emotional consequences of the decision. Design/methodology/approach – The paper uses an Australian, nationally representative panel for two Bayesian multivariate regressions. Findings – Unsatisfied entrepreneurs that transition from self- to wage-employment improve their income, life and job satisfaction. For satisfied entrepreneurs, continuing or transitioning makes little difference: job and life satisfaction develop similarly. The health of continuing entrepreneurs suffers regardless of whether they are satisfied or unsatisfied. Research limitations/implications – Unobserved heterogeneity is only addressed within cohorts, not across cohorts. It is possible, that transitioning entrepreneurs are inherently different from continuing entrepreneurs. Further research could include a more fine-grained study of entrepreneurship’s negative health implications or include work-family balance as return to self-employment. Practical implications – The findings offer clear advice to entrepreneurs that are unsatisfied with their venture: they will likely benefit from transitioning to wage-employment. In addition, it offers a warning to individuals with existing health issues who are considering self-employment. Originality/value – Academic interest in entrepreneurship exit is growing. This paper is the first to study the financial, physical, social and emotional life consequences of both satisfied and unsatisfied entrepreneurs. It contributes to the discussion of what motivates entrepreneurs to become and remain self-employed.

Informality: does financial development matter?

2017 ◽  
Vol 37 (1/2) ◽  
pp. 16-32
Author(s):  
Aeggarchat Sirisankanan
Keyword(s):  
Economic Growth ◽  
Financial Development ◽  
Occupational Choice ◽  
Choice Model ◽  
Negative Relationship ◽  
Informal Employment ◽  
Policy Makers ◽  
Content Type ◽  
Self Employment ◽  
The Impact

Purpose Financial development may be an alternative policy for controlling informal employment. However, there is still an ambiguous relationship between financial development and informal employment. The purpose of this paper is to examine the impact of financial development on informal employment. Design/methodology/approach The paper is based on both the occupational choice model and on the concept of financial development and economic growth which can produce either a positive or negative relationship between financial development and informal employment. Consequently, the author formulated empirical specifications and applied an econometric technique to examine the actual relationship. Findings The empirical results indicated that financial development can reduce informal employment. The author also found that the relationship between financial development and informal employment varies, depending on the level of economic growth and development. Research limitations/implications Even though there are many types of informal employment, this paper uses only informal self-employment as a proxy of informal employment. To implement it properly, all types of informal employment should also be examined. Practical implications Becoming informal employment depends on several factors; policy makers for each country should carefully examine the specific relationship between financial development and informal employment for their own country. Social implications The paper presents alternative choices for policy makers to control informal employment by increasing financial development, especially in developing countries. This policy also includes promoting microfinance which will contribute to both formality and increasing the strength of the community. Originality/value From the two possible impacts of financial development on informal employment, this paper affirms that financial development can reduce informal employment.

The influence of the tax system on the location of holding companies in Spain

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Gilberto Cardenas Cardenas ◽  
Sofía García Gámez ◽  
Álvaro Salas Suarez
Keyword(s):  
Empirical Studies ◽  
Academic Research ◽  
Effective Tax Rate ◽  
Tax System ◽  
Content Type ◽  
Holding Companies ◽  
Government Effectiveness ◽  
Holding Company ◽  
Dependent Variables ◽  
Business Freedom

Purpose The purpose of this article is to determine the influence of the tax system on the location of holding companies in Spain. Design/methodology/approach To achieve this purpose, we have used an analysis of cointegration in time series. The independent variable used was the number of holding companies under Régimen de Entidades de Tenencia de Valores Extranjeros Spanish regime. The dependent variables were divided into two groups: fiscal and non-fiscal variables. The dependent fiscal variables are effective tax rate and double taxation convention, whereas the non-fiscal dependent variables are government effectiveness and business freedom. Findings The study concludes that the fiscal variables are relevant to establish a holding company in Spain, but there are other variables such as government effectiveness and business freedom that show as well as influence on the location of holding companies. Originality/value In the year 2015, the article The influence of the tax system on the location of holding companies in Switzerland was published in the Competitiveness Review. In this article, the influence of taxation on the decision to locate a holding company in Switzerland was analyzed. Now that the Spanish holding regime is consolidated, thanks to more than twenty years of application in our tax legislation, we consider it important to carry out an analysis of the influence of taxation in the decision to locate a holding company in our country. As already mentioned in the article published in 2015, the study of the taxation of holding companies is a topic related more to law firms and/or tax advisors than to academic research, and it is for this reason that there are few empirical studies on this topic. Hence, the research developed in this paper is important.

scholarly journals Entrepreneurial skills and wage employment

2016 ◽  
Vol 37 (3) ◽  
pp. 556-588 ◽  
Author(s):  
Aleksander Kucel ◽  
Montserrat Vilalta-Bufi
Keyword(s):  
Parental Education ◽  
Heckman Selection Model ◽  
Content Type ◽  
Self Employment ◽  
Entrepreneurial Skills ◽  
Wage Employment ◽  
Definition Of ◽  
The Individual ◽  
Year 2000 ◽  
Heckman Selection

Purpose – Promotion of entrepreneurial skills is often considered as an adequate policy to enhance job creation and economic growth. However, neither the definition of entrepreneurial skills, nor the costs and benefits of such a policy are clear. The purpose of this paper is to check whether the benefits of entrepreneurial skills extent beyond self-employment. The authors denote entrepreneurial skills as those competencies that enhance the likelihood of self-employment. Then the authors analyze whether they are rewarded in wage employment. Design/methodology/approach – The authors estimate a Heckman selection model with wages in a salaried job as the main dependent variable and working in wage employment vs self-employment as the selection equation. The authors use a sample of higher education graduates from Spain, from the year 2000 interviewed in 2005 within the REFLEX survey. Findings – Results reveal that alertness to new opportunities, ability to mobilize others and knowledge of other fields are the competencies that enhance self-employment in Spain. Yet, these skills are not rewarded in a salaried job. Therefore, benefits of policies fostering entrepreneurial skills do not extend to wage employment in Spain. Research limitations/implications – The exclusion restriction used in the analysis is father’s education. The authors assume that all the effect of parental education on wages goes through education attainment of the individual and her ability (proxied by her grade in secondary education). A better proxy for ability would be desirable. Originality/value – The authors identify which competencies enhance self-employment in Spain. The authors find that these competencies are not rewarded in wage employment, so the benefits of policies promoting entrepreneurial education remain within self-employment activity only.

scholarly journals Solo self-employment, entrepreneurial subjectivity and the security–precarity continuum: Evidence from private tutors in the supplementary education industry

2021 ◽  
pp. 0308518X2110092
Author(s):  
Sarah L Holloway ◽  
Helena Pimlott-Wilson
Keyword(s):  
Occupational Choice ◽  
Entrepreneurial Activity ◽  
Development Economic ◽  
Long Term Outcomes ◽  
Dominant Form ◽  
Policy Makers ◽  
Supplementary Education ◽  
Self Employment ◽  
Education Industry

Entrepreneurship is regarded by policy makers and politicians as an accelerant for economic development. Economic geography demonstrates that rather than stimulating entrepreneurship in general, policy makers should support specific forms of entrepreneurship that fuel wider growth. The paper's original contribution is to insist that entrepreneurship research must also explore less growth-oriented, but crucially very widespread, forms of entrepreneurial activity. The paper therefore places solo self-employment – the self-employed without employees – centre stage as an exemplar of this trend. Research is presented on private tutors who run businesses from home, offering children one-to-one tuition in the burgeoning supplementary education industry. The paper scrutinises the causes, configuration and consequences of such solo self-employment as an economically marginal, but numerically dominant, form of entrepreneurship. In so doing, it makes three conceptual advances in the exploration of heterogeneous entrepreneurship. First, in examining why individuals become self-employed, the paper moves beyond classic efforts to understand entrepreneurship through binary push/pull mechanisms in models of occupational choice. Instead, the analysis demonstrates the importance of risk in entrepreneurship and paid employment, highlighting the multiple pathways into solo self-employment as opportunities and constraints coalesce in individual's lives. Secondly, in considering how the solo self-employed think about business, the research breaks through conventional definitions of entrepreneurship to demonstrate that solo self-employment involves a distinctively entrepreneurial subjectivity and practices. Thirdly, by investigating the consequences of solo self-employment, the findings transcend dualist interpretations of self-employment as the realm of entrepreneurial wealth or economic precarity, highlighting instead a security–precarity continuum in immediate and long-term outcomes.

Gender Differences in Earnings Rewards to Personality Traits in Wage-employment and Self-employment Labour Markets

2021 ◽  
Vol 46 (2) ◽  
pp. 204-228
Author(s):  
Ibrahim Mohammed ◽  
Priscilla Twumasi Baffour ◽  
Wassiuw Abdul Rahaman
Keyword(s):  
Gender Differences ◽  
Human Capital ◽  
Personality Traits ◽  
Big Five ◽  
Cognitive Skills ◽  
Big Five Personality Traits ◽  
Big Five Personality ◽  
Self Employment ◽  
Wage Employment ◽  
Wage Equations

In an extensive review of wage determination papers, it is concluded that the standard demographic and human capital factors explain little of earning differentials. Consequently, there is a growing interest among economists to include non-cognitive skills measured by personality traits in recent empirical literature to explain variations in earnings. In a bid to contribute empirical evidence to this strand of literature, this study examines the associations between the Big-Five personality traits (i.e., agreeableness, conscientiousness, openness, extraversion and neuroticism) and earnings, using the World Bank’s Skills towards Employment and Productivity (STEP) data on Ghana. The study employed regression techniques to estimate a series of semi-logarithmic wage equations that include demographic and human capital factors and the Big-Five personality traits to determine how important these factors are in explaining wage and self-employment earnings. Furthermore, the estimations of the wage equations are done separately for males and females to highlight any gender differences in the way personality traits contribute to earnings. Findings are largely consistent with the literature but uniquely demonstrate that in a power-distant culture like Ghana, where, traditionally, girl-child education has been relegated to the background, agreeable females, and not males, are rewarded in the formal wage employment labour market. However, in the informal self-employment labour market, conscientious males, and not females, are positively rewarded with higher earnings. These unique findings contribute to our understanding of the gender differences in the relative importance of non-cognitive skills in the formal and informal labour markets. JEL Codes: J31, J24

Impact of training on entrepreneurial intention: an interactive cognitive perspective

2015 ◽  
Vol 27 (6) ◽  
pp. 593-616 ◽  
Author(s):  
Fayçal Boukamcha
Keyword(s):  
Training Program ◽  
Case Studies ◽  
Entrepreneurial Intention ◽  
Equation Modeling ◽  
Cognitive Perspective ◽  
Content Type ◽  
Success Stories ◽  
Self Employment ◽  
Entrepreneurial Training ◽  
The Impact

Purpose – This paper aims to clarify the impact of the entrepreneurial training on a Tunisian trainee’s entrepreneurial cognitions and intention. An interactive cognitive perspective was adopted to test the interaction effect between the entrepreneurial cognitions: the perceived entrepreneurial self-efficacy, the perceived entrepreneurial feasibility and entrepreneurial desirability. A research model was built showing several relationships between entrepreneurial training, cognitions and intention. Design/methodology/approach – A survey was conducted on a convenience sample of 240 participants in four business incubators. The maximum-likelihood test was used as a structural equation modeling method to test the model. Findings – The results show the importance of the entrepreneurial training in the development of entrepreneurial cognitions. Further, the findings, to some extent, validate the interaction between the entrepreneurial cognitive patterns. However, entrepreneurial intention was only predicted through the entrepreneurial desirability. Several implications are discussed at the end of this paper. Practical implications – The findings seem interesting insofar, as they show the importance of entrepreneurial trainings in the entrepreneurial intention development through the enhancement of desirability. This process can be triggered by a training program that contains case studies, success stories and conferences to make the youth enthusiastic about self-employment. Originality/value – The significant impact of the entrepreneurial training on trainees’ cognitions should encourage governments and incubators to promote entrepreneurial training programs to enhance the youths’ willingness to create their own businesses. The findings in this paper seem interesting insofar as they show the importance of entrepreneurial trainings in the entrepreneurial intention development through the enhancement of desirability. This process can be triggered by a training program that contains case studies, success stories and conferences to make the youth enthusiastic about self-employment.

Measures of success for self-employed mothers in Spain

2015 ◽  
Vol 21 (1) ◽  
pp. 128-145 ◽  
Author(s):  
Patricia Gabaldon ◽  
Celia De Anca ◽  
Concepcion Galdón
Keyword(s):  
Linear Regression Analysis ◽  
Secondary Data ◽  
Holistic Approach ◽  
Financial Indicators ◽  
Policy Makers ◽  
Content Type ◽  
Self Employment ◽  
Employed Mothers ◽  
Time Use Survey ◽  
Alternative Measures

Purpose – The purpose of this paper is to investigate alternative measures to better understand and measure success for self-employed mothers in addition to the usual financial indicators. Design/methodology/approach – The present study is a comparative analysis of time spent at work and undertaking childcare by female workers with children in Spain between 2009 and 2010, using a combination of descriptive statistics and linear regression analysis based on the Time-Use Survey 2009-2010. Findings – The results of the paper indicate that self-employed working mothers tend to spend more time with their children when these are under the age of ten, and that they work longer hours than salaried mothers. Research limitations/implications – This paper has some limitations due to the quantitative approach to secondary data. Further qualitative research could clarify some of the findings; moreover the study is based on Spain, so extending to other countries would help validate the results. Social implications – Policy makers, in general – but more specifically in high unemployment scenarios – can facilitate self-employment for both men and women to reduce unemployment and to offer workers the prospect of a more balanced life. Originality/value – This research contributes to the existing literature, which fosters a more holistic approach to the analysis of female-run ventures by measuring performance using not only economic indicators, but also personal achievements.

Government failures and non-performing loans in European countries: a spatial approach

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ferdinando Ofria ◽  
Massimo Mucciardi
Keyword(s):  
Public Debt ◽  
Geographically Weighted Regression ◽  
European Countries ◽  
Weighted Regression ◽  
Second Step ◽  
Ols Regression ◽  
Content Type ◽  
The Impact ◽  
The Relationship ◽  
The Eu

PurposeThe purpose is to analyze the spatially varying impacts of corruption and public debt as % of GDP (proxies of government failures) on non-performing loans (NPLs) in European countries; comparing two periods: one prior to the crisis of 2007 and another one after that. The authors first modeled the NPLs with an ordinary lest square (OLS) regression and found clear evidence of spatial instability in the distribution of the residuals. As a second step, the authors utilized the geographically weighted regression (GWR) to explore regional variations in the relationship between NPLs and the proxies of “Government failures”.Design/methodology/approachThe authors first modeled the NPL with an OLS regression and found clear evidence of spatial instability in the distribution of the residuals. As a second step, the author utilized the Geographically Weighted Regression (GWR) (Fotheringham et al., 2002) to explore regional variations in the relationship between NPLs and proxies of “Government failures” (corruption and public debt as % of GDP).FindingsThe results confirm that corruption and public debt as % of GDP, after the crisis of 2007, have affected significantly on NPLs of the EU countries and the following countries neighboring the EU: Switzerland, Iceland, Norway, Montenegro, and Turkey.Originality/valueIn a spatial prospective, unprecedented in the literature, this research focused on the impact of corruption and public debt as % of GDP on NPLs in European countries. The positive correlation, as expected, between public debt and NPLs highlights that fiscal problems in Eurozone countries have led to an important rise of problem loans. The impact of institutional corruption on NPLs reports that the higher the corruption, the higher is the level of NPLs.

scholarly journals Organising household consumption and occupational proportions

2018 ◽  
Vol 26 (4) ◽  
pp. 748-772
Author(s):  
Tolu Olarewaju
Keyword(s):  
Developing Countries ◽  
Occupational Status ◽  
Household Consumption ◽  
Quantile Regressions ◽  
Content Type ◽  
Self Employment ◽  
Causality Tests ◽  
Positive Effect ◽  
Practical Implications ◽  
Better Than

Purpose The purpose of this paper is to contribute to the occupational status and entrepreneurship research in developing countries by proposing that there are implications for household consumption depending on the occupational status proportion of households. When the occupational proportion of the household changes, household consumption is affected. This effect also changes depending on what quantile level the household is in terms of household consumption. Design/methodology/approach The paper makes use of OLS and quantile regressions to examine 6,919 households comprising 40,294 individuals from the 2009 Nigerian Living standards measurement survey. Findings The paper finds that there are implications for household consumption based on the proportion of individuals in each occupational category. The contributions of each employment proportion changes at different quantiles with self-employed individuals increasing household consumption at the lower quantiles but reducing household consumption at the upper quantiles. Crucially, having a higher proportion of unemployed individuals in the household is oftentimes better than having a higher proportion of own account self-employed individuals. Research limitations/implications This paper offers new insights into how occupation proportion influences household consumption in developing countries. As a result, the household could seek to organise its members in such a way as to maximise combined household consumption, as diverse occupational statuses contribute differently to the household consumption at different quantile levels. The nature of the data used in this study however does not allow for causality tests. Practical implications The proportion of employment statuses in the household has implications for household consumption and so the mix of employment in the household is important. The self-employed could also be involved in activities to enhance household consumption that are not captured by labour income. However, self-employment does not seem to always have a positive effect on household consumption and sometimes unemployment might be better. Originality/value The paper provides a new way to view the household as an organising entity in terms of how it can allocate employment proportions to maximise household consumption.

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