Date of Award

7-1999

Degree Type

Thesis

Degree Name

Doctor of Philosophy (PhD)

Department

Economics / Economic Policy

Supervisor

Professor Peter J. Kuhn

Co-Supervisor

Professor Lonnie Magee

Committee Member

Professor A. Leslie Robb

Abstract

Self-employment has risen dramatically in Canada, accounting for a disproportionate share of job growth since the early 1970's. This trend makes understanding this sector of the labour market imperative to understanding the overall labour market. This dissertation comprises three essays. The goal of the first two essays is to examine possible reasons for the trends in self-employment while the third essay quantifies and characterizes income tax non-compliance among the self-employed. In the first essay I assess the importance of macroeconomic conditions and the tax environment in explaining the trends in male self-employment in North America. I use microdata for the period 1983-1994 from Canada and the United States, which are perhaps more similar in overall institutional structure than any other two countries, but which differ substantially in their income tax policy, macroeconomic conditions, and self-employment trends. My findings suggest that higher income tax and unemployment rates are associated with an increase in the rate of male self-employment in the two countries. Changes in the tax environment account for a considerable amount of the secular trends in male self-employment over this period, while changing economic conditions played a smaller role in determining these trends. The second essay, which focuses on Canadian self-employment trends, examines the dynamics of self-employment among men and women using information on labour force transitions from 13 waves of the Survey of Consumer Finances between 1982 and 1995. The results show that the changes in transition patterns underlying the secular rise in self-employment in Canada were very different for women and men. For women, most of the increase in self-employment is attributable to an increase in their retention rates in self-employment. For men, most is attributable to a decrease in the stability of paid employment. The final essay provides estimates of the degree of income tax noncompliance by Canadian self-employed households using a series of Canadian Family Expenditure Surveys from 1969 to 1992. These estimates are disaggregated across years, demographic characteristics and occupation to shed some light on the determinants of such activities in Canada and to provide guidance to tax enforcement policy makers. My main findings are as follows. I find that the degree of noncompliance by the self-employed varies significantly by occupation, age and the number of household members self-employed. Further, there is no clear time trend in the estimates of noncompliance and education does not appear to influence these estimates.

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