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http://hdl.handle.net/10419/27230
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| Title: | | Risky earnings, taxation and entrepreneurial choice: a microeconometric model for Germany  |
| Authors: | | Fossen, Frank M. |
| Issue Date: | | 2007 |
| Series/Report no.: | | Discussion papers // German Institute for Economic Research 705 |
| Abstract: | | Which role do individual income prospects play in the decision to be an entrepreneur rather than an employee? In a model of occupational choice, higher expected after-tax earnings attract people to self-employment, while more risky net earnings deter risk-averse individuals. In this paper I analyse the expected value and variance of income in self-employment and dependent employment empirically, accounting for selection. Based on this analysis, structural models of self-employment entry and exit under risk are estimated, which include a standard risk aversion parameter. The model predicts that the German income tax reduction of 2000 induced smaller exit rates out of self-employment for men and smaller entry rates for women. |
| Subjects: | | Entrepreneurship Risk Returns to Self-Employment Taxation |
| JEL: | | J23 H24 D81 C51 |
| Document Type: | | Working Paper |
| Appears in Collections: | | Publikationen von Forscherinnen und Forschern des DIW DIW-Diskussionspapiere
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