Estimating the Income under-Reporting of Self-Employed Households in Iran

In this study, the extent of self-employed households' income under-reporting is estimated based on the expenditure approach, using household budget data. In this regard, the Engel curve of wage earners, which represents the relationship between their income and food expenditures, is used to estimate the true income of self-employed households based on their stated food expenditures. Through this approach, the average under-reporting of self-employed households during 2000 to 2019 equals 8.5 percent of their total income. By examining under-reporting among different groups of jobs, it can be observed that the highest under-reporting is among the "agriculture, forestry and fishery skilled workers" and "legislators, high-ranking officials and managers". Then, in order to study the temporal under-reporting behavior, it is estimated separately for different years. The results show an ascending trend in the extent of under-reporting during 2004-2010, in a way that this extent reaches its highest point in 2010.