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Entrepreneurship and the policy environment

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  • Yannis Georgellis
  • Howard J. Wall

Abstract

This paper uses a panel approach to examine the effect that the government-policy environment has on the level of entrepreneurship. Specifically, the authors investigate whether marginal income tax rates and bankruptcy exemptions influence rates of entrepreneurship. Whereas previous work in the literature finds that both policies are positively related to entrepreneurship, these results show non-monotonic relationships: a U-shaped relationship between marginal tax rates and entrepreneurship and an S-shaped relationship between bankruptcy exemptions and entrepreneurship.

Suggested Citation

  • Yannis Georgellis & Howard J. Wall, 2006. "Entrepreneurship and the policy environment," Review, Federal Reserve Bank of St. Louis, vol. 88(Mar), pages 95-112.
  • Handle: RePEc:fip:fedlrv:y:2006:i:mar:p:95-112:n:v.88no.2
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    Cited by:

    1. Fossen, Frank M. & Steiner, Viktor, 2006. "Income Taxes and Entrepreneurial Choice: Empirical Evidence from Germany," IZA Discussion Papers 2164, Institute of Labor Economics (IZA).
    2. Magnus Henrekson & Tino Sanandaji, 2011. "Entrepreneurship and the theory of taxation," Small Business Economics, Springer, vol. 37(2), pages 167-185, September.
    3. Frank M. Fossen, 2007. "Risky Earnings, Taxation and Entrepreneurial Choice: A Microeconometric Model for Germany," Discussion Papers of DIW Berlin 705, DIW Berlin, German Institute for Economic Research.
    4. Donald Bruce & John Deskins, 2012. "Can state tax policies be used to promote entrepreneurial activity?," Small Business Economics, Springer, vol. 38(4), pages 375-397, May.
    5. Jeffrey Thompson, 2012. "Raising Revenue from High-Income Households: Should States Continue to Place the Lowest Tax Rates on Those with the Highest Incomes?," Published Studies revenue_peri_march5, Political Economy Research Institute, University of Massachusetts at Amherst.
    6. Ye (George) Jia, 2015. "The impact of personal bankruptcy law on entrepreneurship," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 48(2), pages 464-493, May.
    7. Frank Fossen & Viktor Steiner, 2009. "Income taxes and entrepreneurial choice: empirical evidence from two German natural experiments," Empirical Economics, Springer, vol. 36(3), pages 487-513, June.
    8. Mina Baliamoune-Lutz & Pierre Garello, 2014. "Tax structure and entrepreneurship," Small Business Economics, Springer, vol. 42(1), pages 165-190, January.
    9. Da Rin, M. & Di Giacomo, M. & Sembenelli, A., 2009. "Entrepreneurship, Firm Entry, and the Taxation of Corporate Income : Evidence from Europe (Revised version of DP 2008-65)," Discussion Paper 2009-61, Tilburg University, Center for Economic Research.
    10. Akyol, Ahmet & Athreya, Kartik, 2011. "Credit and self-employment," Journal of Economic Dynamics and Control, Elsevier, vol. 35(3), pages 363-385, March.
    11. Estrin, Saul & Korosteleva, Julia & Mickiewicz, Tomasz, 2013. "Which institutions encourage entrepreneurial growth aspirations?," Journal of Business Venturing, Elsevier, vol. 28(4), pages 564-580.
    12. Aparna Mathur, 2010. "Health insurance and job creation by the self-employed," Small Business Economics, Springer, vol. 35(3), pages 299-317, October.
    13. Howard J. Wall, 2003. "Entrepreneurship and the deregulation of banking: how strong is the evidence?," Working Papers 2002-032, Federal Reserve Bank of St. Louis.
    14. Ruud A. De Mooij & Gaëtan J.A. Nicodème & Gaëtan J.A. Nicodeme, 2006. "Corporate Tax Policy, Entrepreneurship and Incorporation in the EU," CESifo Working Paper Series 1883, CESifo.
    15. Wall, Howard J., 2004. "Entrepreneurship and the deregulation of banking," Economics Letters, Elsevier, vol. 82(3), pages 333-339, March.
    16. González, Francisco, 2021. "Creditor rights and entrepreneurship: Evidence from legal changes," International Review of Economics & Finance, Elsevier, vol. 75(C), pages 278-299.
    17. Kevin B. 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.).

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