Taxation and Entrepreneurship in a Welfare State
AbstractDoes tax policy affect the rate of self-employment in a modern welfare state? This question is analyzed empirically based on Swedish data for the entire post-war period. Available tax data indicate that payroll taxes have had a negative influence on the unincorporated rate of self-employment, though the effect is modest. No effects from regular labor income taxation or capital gains taxation are found. The paper improves upon earlier studies in that it tries to separate the effects of different taxes, and uses cointegration techniques. A further extension is that it studies a Scandinavian high-tax welfare state. Earlier time-series studies analyzing self-employment and taxation have with few exceptions been based on data from countries with relatively low tax levels and less comprehensive welfare systems, notably the US and the UK.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Research Institute of Industrial Economics in its series Working Paper Series with number 800.
Length: 38 pages
Date of creation: 10 Jun 2009
Date of revision:
Publication status: Forthcoming as Stenkula, Mikael, 'Taxation and Entrepreneurship in a Welfare State' in Small Business Economics .
Contact details of provider:
Postal: Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden
Phone: +46 8 665 4500
Fax: +46 8 665 4599
Web page: http://www.ifn.se/
More information through EDIRC
Entrepreneurship; Self-employment; Taxation; Welfare state;
Other versions of this item:
- H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
- J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
- L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-07-11 (All new papers)
- NEP-ENT-2009-07-11 (Entrepreneurship)
- NEP-PBE-2009-07-11 (Public Economics)
- NEP-PUB-2009-07-11 (Public Finance)
- NEP-SBM-2009-07-11 (Small Business Management)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- David G. Blanchflower, 2000.
"Self-Employment in OECD Countries,"
NBER Working Papers
7486, National Bureau of Economic Research, Inc.
- Cowling, Marc & Mitchell, Peter, 1997. "The Evolution of U.K. Self-Employment: A Study of Government Policy and the Role of the Macroeconomy," The Manchester School of Economic & Social Studies, University of Manchester, vol. 65(4), pages 427-42, September.
- Magnus Henrekson, 2005.
"Entrepreneurship: a weak link in the welfare state?,"
Industrial and Corporate Change,
Oxford University Press, vol. 14(3), pages 437-467, June.
- Henrekson, Magnus, 2002. "Entrepreneurship: A Weak Link in the Welfare State," Working Paper Series in Economics and Finance 518, Stockholm School of Economics, revised 04 Mar 2005.
- Robert W. Fairlie & Bruce D. Meyer, 2000. "Trends in Self-Employment among White and Black Men during the Twentieth Century," Journal of Human Resources, University of Wisconsin Press, vol. 35(4), pages 643-669.
- Herb J. Schuetze, .
"Taxes, Economic Conditions And Recent Trends in Male Self-Employment: A Canada-U.S. Comparison,"
Canadian International Labour Network Working Papers
11, McMaster University.
- Schuetze, Herb J., 2000. "Taxes, economic conditions and recent trends in male self-employment: a Canada-US comparison," Labour Economics, Elsevier, vol. 7(5), pages 507-544, September.
- Ilmakunnas, P. & Kanniainen, V. & Lammi, U., 1999.
"Entrepreneurship, Economic Risks, and Risk-Insurance in the Welfare State,"
University of Helsinki, Department of Economics
453, Department of Economics.
- Pekka Ilmakunnas & Vesa Kanniainen & Uki Lammi, . "Entrepreneurship, Economic Risks, and Risk-Insurance in the Welfare State," EPRU Working Paper Series 99-03, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
- Simon C. Parker & Martin T. Robson, 2004. "Explaining International Variations in Self-Employment: Evidence from a Panel of OECD Countries," Southern Economic Journal, Southern Economic Association, vol. 71(2), pages 287-301, October.
- Bruce, Donald, 2002. "Taxes and Entrepreneurial Endurance: Evidence from the Self-Employed," National Tax Journal, National Tax Association, vol. 55(N. 1), pages 5-24, March Cit.
- Lindquist, Matthew J. & Vilhelmsson, Roger, 2004.
"Is the Swedish Central Government a Wage Leader?,"
Working Paper Series
8/2004, Swedish Institute for Social Research.
- Davidsson, Per & Henrekson, Magnus, 2000.
"Determinants of the Prevalence of Start-ups and High-Growth Firms,"
Working Paper Series in Economics and Finance
381, Stockholm School of Economics, revised 26 May 2002.
- Davidsson, Per & Henrekson, Magnus, 2002. " Determinants of the Prevalence of Start-Ups and High-Growth Firms," Small Business Economics, Springer, vol. 19(2), pages 81-104, September.
- Henrekson, Magnus & Johansson, Dan, 2008.
"Competencies and Institutions Fostering High-growth Firms,"
Foundations and Trends(R) in Entrepreneurship,
now publishers, vol. 5(1), pages 1-80, November.
- Henrekson, Magnus & Johansson, Dan, 2008. "Competencies and Institutions Fostering High-growth Firms," Ratio Working Papers 123, The Ratio Institute.
- Henrekson, Magnus & Johansson, Dan, 2008. "Competencies and Institutions Fostering High-growth Firms," Working Paper Series 757, Research Institute of Industrial Economics.
- Martin T. Robson & Colin Wren, 1999. "Marginal and Average Tax Rates and the Incentive for Self-Employment," Southern Economic Journal, Southern Economic Association, vol. 65(4), pages 757-773, April.
- Bruce, Donald, 2000. "Effects of the United States tax system on transitions into self-employment," Labour Economics, Elsevier, vol. 7(5), pages 545-574, September.
- R. Glenn Hubbard & William M. Gentry, 2000. "Tax Policy and Entrepreneurial Entry," American Economic Review, American Economic Association, vol. 90(2), pages 283-287, May.
- Kevin Moore, 2004. "The effects of the 1986 and 1993 tax reforms on self-employment," Finance and Economics Discussion Series 2004-05, Board of Governors of the Federal Reserve System (U.S.).
- Blau, David M, 1987. "A Time-Series Analysis of Self-employment in the United State," Journal of Political Economy, University of Chicago Press, vol. 95(3), pages 445-67, June.
- Parker, Simon C, 1996. "A Time Series Model of Self-Employment under Uncertainty," Economica, London School of Economics and Political Science, vol. 63(251), pages 459-75, August.
- Kihlstrom, Richard E. & Laffont, Jean-Jacques, 1983. "Taxation and risk taking in general equilibrium models with free entry," Journal of Public Economics, Elsevier, vol. 21(2), pages 159-181, July.
- Donald Bruce & Mohammed Mohsin, 2006. "Tax Policy and Entrepreneurship: New Time Series Evidence," Small Business Economics, Springer, vol. 26(5), pages 409-425, 06.
- Hansson, Åsa, 2005. "The Wealth Tax and Entrepreneurial Activity," Working Papers 2005:43, Lund University, Department of Economics.
- Cullen, Julie Berry & Gordon, Roger H., 2007. "Taxes and entrepreneurial risk-taking: Theory and evidence for the U.S," Journal of Public Economics, Elsevier, vol. 91(7-8), pages 1479-1505, August.
- Hansson, Åsa, 2008. "Income taxes and the probability to become self-employed: The case of Sweden," Ratio Working Papers 122, The Ratio Institute.
- Henrekson, Magnus & Stenkula, Mikael, 2009. "Entrepreneurship and Public Policy," Working Paper Series 804, Research Institute of Industrial Economics.
- Mina Baliamoune-Lutz & Pierre Garello, 2011.
"Tax Structure And Entrepreneurship,"
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Elisabeth Gustafsson).
If references are entirely missing, you can add them using this form.