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Entrepreneurial culture, occupational choice and tax policy

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  • Kar, Saibal
  • Mukherjee, Vivekananda

Abstract

This paper studies the influence of entrepreneurial culture among social groups in an economy. The cultural factor determines their occupational preferences. We develop a model in which a concentration factor has been used as a measure of business culture determining the occupational choice patterns of otherwise identical social groups. The occupational distribution of individuals from different groups is obtained by comparing expected utilities from employment and entrepreneurship. Based on the labor market outcomes the mean income and income variance of different groups is calculated. Individuals from groups with greater cultural traits display higher relative risk aversion with a high income variance compared to other groups. We propose a tax- subsidy policy and obtain conditions for maximizing social utility.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 24104.

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Date of creation: 2006
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Handle: RePEc:pra:mprapa:24104

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Related research

Keywords: Entrepreneurial culture; Self-employment; Risk aversion; Income variance; National Income; Tax-subsidy Policy;

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  1. Appelbaum, Elie & Katz, Eliakim, 1986. "Measures of Risk Aversion and Comparative Statics of Industry Equilibrium," American Economic Review, American Economic Association, vol. 76(3), pages 524-29, June.
  2. Duleep, Harriet Orcutt & Regets, Mark C., 1997. "The decline in immigrant entry earnings: Less transferable skills or lower ability?," The Quarterly Review of Economics and Finance, Elsevier, vol. 37(Supplemen), pages 189-208.
  3. Edward Funkhouser & Stephen J. Trejo, 1995. "The labor market skills of recent male immigrants: Evidence from the Current Population Survey," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 48(4), pages 792-811, July.
  4. Abhijit V. Banerjee & Andrew F. Newman, 1990. "Occupational Choice and the Process of Development," Discussion Papers 911, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  5. Robert E. Lucas Jr., 1978. "On the Size Distribution of Business Firms," Bell Journal of Economics, The RAND Corporation, vol. 9(2), pages 508-523, Autumn.
  6. Holtz-Eakin, Douglas & Joulfaian, David & Rosen, Harvey S, 1994. "Sticking It Out: Entrepreneurial Survival and Liquidity Constraints," Journal of Political Economy, University of Chicago Press, vol. 102(1), pages 53-75, February.
  7. Robert J. LaLonde & Robert H. Topel, 1990. "The Assimilation of Immigrants in the U.S. Labor Markets," NBER Working Papers 3573, National Bureau of Economic Research, Inc.
  8. M. W. Kirby, 1992. "Institutional rigidities and economic decline: reflections on the British experience," Economic History Review, Economic History Society, vol. 45(4), pages 637-660, November.
  9. Maitreesh Ghatak & Nien-Huei Jiang, 2000. "A Simple Model of Inequality, Occupational Choice, and Development," Vanderbilt University Department of Economics Working Papers 0007, Vanderbilt University Department of Economics.
  10. Sexton, Donald L. & Bowman, Nancy, 1985. "The entrepreneur: A capable executive and more," Journal of Business Venturing, Elsevier, vol. 1(1), pages 129-140.
  11. Jovanovic, Boyan, 1982. "Selection and the Evolution of Industry," Econometrica, Econometric Society, vol. 50(3), pages 649-70, May.
  12. Bates, Timothy, 1995. "Self-employment entry across industry groups," Journal of Business Venturing, Elsevier, vol. 10(2), pages 143-156, March.
  13. Andrew M. Yuengert, 1995. "Testing Hypotheses of Immigrant Self-Employment," Journal of Human Resources, University of Wisconsin Press, vol. 30(1), pages 194-204.
  14. Kihlstrom, Richard E & Laffont, Jean-Jacques, 1979. "A General Equilibrium Entrepreneurial Theory of Firm Formation Based on Risk Aversion," Journal of Political Economy, University of Chicago Press, vol. 87(4), pages 719-48, August.
  15. Evans, David S & Jovanovic, Boyan, 1989. "An Estimated Model of Entrepreneurial Choice under Liquidity Constraints," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 808-27, August.
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