Are Alternative Work Arrangements the Future of (Part-Time) Work? Evidence from Tax Records

New institutions and technologies have made it simpler for self-employed individuals to perform work for firms and peers that previously would have been done through traditional employment relationships. Though these new work arrangements may provide employment opportunities for those on the margins of the workforce or increased flexibility for those who desire it, they raise concerns that traditional employment could be replaced by independent contractors. However, little is known about how often firms and industries replace employees with workers in alternative arrangements, or about the characteristics of firms and workers engaged in these arrangements, because the firms that use them are not easily identified in traditional datasets used for labor market research.

Economists Andrew Garin and Dmitri Koustas propose to link Internal Revenue Service data from two understudied tax records, forms 1099-MISC1 and 1099-K2, with individual tax record filings (1040s) to better understand how non-standard work has evolved for different firms and segments of the workforce. Phase one will provide new measures and classifications of alternative work arrangements and develop public-use statistics that can be compared to other sources. The PIs will examine both the worker- and firm-side of 1099 relationships and document how they relate to broader trends in self-employment. The goal is to resolve conflicting trends in self-employment filings and other surveys. Phase two will examine the reasons why individuals engage in non-standard work, distinguishing between labor-supply-side “pull” factors and labor-demand-side “push” factors that underlie non-employee (as opposed to W-2 employment) relationships.