EconStor >
ifo Institut – Leibniz-Institut für Wirtschaftsforschung an der Universität München >
CESifo Working Papers, CESifo Group Munich >

Please use this identifier to cite or link to this item:

http://hdl.handle.net/10419/30600
  
Title:Income mobility of owners of small businesses when boundaries between occupations are vague PDF Logo
Authors:Thoresen, Thor Olav
Issue Date:2009
Series/Report no.:CESifo working paper 2633
Abstract:Ownership of small businesses can facilitate upward mobility through the income hierarchy and help individuals maintain a place at the higher end of the income distribution hierarchy. This paper compares the positional stability of owners of small businesses with that of wage earners, arguing that describing the relative position of different occupations faces definitional challenges. For instance, the Norwegian dual income tax system encourages owners of small businesses to establish widely held firms, with themselves as employees, because it reduces the tax burden and increases post-tax income. Descriptions of income distribution mobility of different occupations are therefore in danger of being misleading if such occupational measurement problems are not taken into account. I discuss in this paper the income mobility of owners of small firms in Norway 1993-2003 by estimating income transition models for different definitions of occupational status. Business ownership facilitates upward mobility and helps owners maintain a place at the top of the income distribution scale, and wider definitions of what counts as a small business owner enhance these correlations. However, as the paper shows, business owners are more mobile than wage earners and therefore overrepresented at the lower and higher ends of the income distribution ranking, irrespective of definition.
Subjects:income mobility
dual income tax
income of owners of small businesses
random effects model
JEL:D31
H25
H30
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

Files in This Item:
File Description SizeFormat
603308112.pdf235.69 kBAdobe PDF
No. of Downloads: Counter Stats
Download bibliographical data as: BibTeX
Share on:http://hdl.handle.net/10419/30600

Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.