Does the Marginal Tax Rate Affect Activity in the Informal Sector?

Research output: Contribution to journal › Journal article › Research › peer-review

Standard

Does the Marginal Tax Rate Affect Activity in the Informal Sector? / Leth-Petersen, Søren; Skov, Peer Ebbesen.

In: FinanzArchiv/Public Finance Analysis, Vol. 77, No. 4, 12.2021, p. 317-344.

Research output: Contribution to journal › Journal article › Research › peer-review

Harvard

Leth-Petersen, S & Skov, PE 2021, 'Does the Marginal Tax Rate Affect Activity in the Informal Sector?', FinanzArchiv/Public Finance Analysis, vol. 77, no. 4, pp. 317-344. https://doi.org/10.1628/fa-2021-0018

APA

Leth-Petersen, S., & Skov, P. E. (2021). Does the Marginal Tax Rate Affect Activity in the Informal Sector? FinanzArchiv/Public Finance Analysis, 77(4), 317-344. https://doi.org/10.1628/fa-2021-0018

Vancouver

Leth-Petersen S, Skov PE. Does the Marginal Tax Rate Affect Activity in the Informal Sector? FinanzArchiv/Public Finance Analysis. 2021 Dec;77(4):317-344. https://doi.org/10.1628/fa-2021-0018

Author

Leth-Petersen, Søren ; Skov, Peer Ebbesen. / Does the Marginal Tax Rate Affect Activity in the Informal Sector?. In: FinanzArchiv/Public Finance Analysis. 2021 ; Vol. 77, No. 4. pp. 317-344.

Bibtex

@article{d2d078692c0c400085190fe44ae54bb1,
title = "Does the Marginal Tax Rate Affect Activity in the Informal Sector?",
abstract = "This paper uses longitudinal survey data to analyze the sensitivity of informal-sector earnings to a tax reform that reduced the Danish top marginal tax rate from 63 to 56 percent. Studying a general-population representative sample, we find no evidence of informal-sector labor-supply changes caused by the reform. Looking specifically at a sample of vocationally trained males with income close to the tax threshold, we find a significant decrease in the informal-sector participation rate. The evidence shows that taxpayers' understanding of the reform correlates with the response. Finally, back-of-the-envelope calculations show the economic impact is limited. ",
author = "S{\o}ren Leth-Petersen and Skov, {Peer Ebbesen}",
year = "2021",
month = dec,
doi = "10.1628/fa-2021-0018",
language = "English",
volume = "77",
pages = "317--344",
journal = "FinanzArchiv",
issn = "0015-2218",
publisher = "Mohr Siebeck",
number = "4",

}

RIS

TY - JOUR

T1 - Does the Marginal Tax Rate Affect Activity in the Informal Sector?

AU - Leth-Petersen, Søren

AU - Skov, Peer Ebbesen

PY - 2021/12

Y1 - 2021/12

N2 - This paper uses longitudinal survey data to analyze the sensitivity of informal-sector earnings to a tax reform that reduced the Danish top marginal tax rate from 63 to 56 percent. Studying a general-population representative sample, we find no evidence of informal-sector labor-supply changes caused by the reform. Looking specifically at a sample of vocationally trained males with income close to the tax threshold, we find a significant decrease in the informal-sector participation rate. The evidence shows that taxpayers' understanding of the reform correlates with the response. Finally, back-of-the-envelope calculations show the economic impact is limited.

AB - This paper uses longitudinal survey data to analyze the sensitivity of informal-sector earnings to a tax reform that reduced the Danish top marginal tax rate from 63 to 56 percent. Studying a general-population representative sample, we find no evidence of informal-sector labor-supply changes caused by the reform. Looking specifically at a sample of vocationally trained males with income close to the tax threshold, we find a significant decrease in the informal-sector participation rate. The evidence shows that taxpayers' understanding of the reform correlates with the response. Finally, back-of-the-envelope calculations show the economic impact is limited.

U2 - 10.1628/fa-2021-0018

DO - 10.1628/fa-2021-0018

M3 - Journal article

VL - 77

SP - 317

EP - 344

JO - FinanzArchiv

JF - FinanzArchiv

SN - 0015-2218

IS - 4

ER -

ID: 286421486