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Variations of Self-Employed in Eurozone Countries: The Role of Corruption and Wage Rate Growth

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  • Gregory T. Papanikos

Abstract

This study emphasizes two variables as significant determinants of the number of individuals who choose self-employment. First, it is assumed that the opportunity cost of self-employment has a negative effect. This cost is measured as the income that would be earned in wage employment. Second, selfemployment provides more opportunities for tax evasion and tax avoidance. The higher the corruption rate, the higher the self-employment rate. These two variables—wages and corruption scores—are used as potential determinants of the ratio of self-employed persons to the total labor force. Data from the twenty Eurozone countries are employed to test these hypotheses. Both hypotheses cannot be rejected based on the empirical evidence.

Suggested Citation

  • Gregory T. Papanikos, 2024. "Variations of Self-Employed in Eurozone Countries: The Role of Corruption and Wage Rate Growth," Athens Journal of Business & Economics, Athens Institute for Education and Research (ATINER), vol. 10(1), pages 9-18, January.
    • Handle: RePEc:ate:journl:ajbev10i1-1
    DOI: 10.30958/ajbe.10-1-1
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    References listed on IDEAS

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    1. Wiji Arulampalam & Andrea Papini, 2023. "Tax Progressivity and Self-Employment Dynamics," The Review of Economics and Statistics, MIT Press, vol. 105(2), pages 376-391, March.
    2. Sugata Marjit & André Seidel & Marcel Thum, 2017. "Tax Evasion, Corruption and Tax Loopholes," German Economic Review, Verein für Socialpolitik, vol. 18(3), pages 283-301, August.
    3. Joel Slemrod, 2007. "Cheating Ourselves: The Economics of Tax Evasion," Journal of Economic Perspectives, American Economic Association, vol. 21(1), pages 25-48, Winter.
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