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Tax structure and entrepreneurship

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  • Mina Baliamoune-Lutz
  • Pierre Garello

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Abstract

Using macro-level panel data, we examine the effects of taxation and tax progressivity on entrepreneurship in a large group of European countries. We address two main questions. First, we try to explore whether tax increases discourage entrepreneurial activity, focusing on new self-employment (nascent entrepreneurship). Second, we investigate the impact of tax progressivity on entrepreneurship, again focusing on new self-employment. We find that tax progressivity at higher-than-average incomes has a robust negative effect on nascent entrepreneurship. We discuss the policy implications of our results. Copyright Springer Science+Business Media New York 2014

Suggested Citation

  • Mina Baliamoune-Lutz & Pierre Garello, 2014. "Tax structure and entrepreneurship," Small Business Economics, Springer, vol. 42(1), pages 165-190, January.
  • Handle: RePEc:kap:sbusec:v:42:y:2014:i:1:p:165-190
    DOI: 10.1007/s11187-013-9469-9
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    Cited by:

    1. Leonardo Baggiani & Enrico Colombatto, 2015. "A Theory of Feasible Taxation in Advanced Democracies," Working papers 033, Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino.
    2. repec:eee:jiaata:v:29:y:2017:i:c:p:14-31 is not listed on IDEAS
    3. Miguel García-Posada & Juan Mora-Sanguinetti, 2015. "Entrepreneurship and enforcement institutions: disaggregated evidence for Spain," European Journal of Law and Economics, Springer, vol. 40(1), pages 49-74, August.
    4. repec:spr:inrvec:v:64:y:2017:i:3:d:10.1007_s12232-016-0266-z is not listed on IDEAS
    5. Asif Islam, 2014. "Economic growth and crime against small and medium sized enterprises in developing economies," Small Business Economics, Springer, vol. 43(3), pages 677-695, October.
    6. Jörn Block, 2016. "Corporate income taxes and entrepreneurship," IZA World of Labor, Institute for the Study of Labor (IZA), pages 257-257, May.
    7. Bradley Heim & Ithai Lurie, 2014. "Does health reform affect self-employment? Evidence from Massachusetts," Small Business Economics, Springer, vol. 43(4), pages 917-930, December.
    8. Minford, Lucy & Meenagh, David, 2018. "Supply-side policy and economic growth: A case study of the UK," Cardiff Economics Working Papers E2018/10, Cardiff University, Cardiff Business School, Economics Section.
    9. Maksim Belitski & Farzana Chowdhury & Sameeksha Desai, 2016. "Taxes, corruption, and entry," Small Business Economics, Springer, vol. 47(1), pages 201-216, June.

    More about this item

    Keywords

    Entrepreneurship; Tax structure; Progressivity; Panel data; C23; H24; H29; M13; L26;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H29 - Public Economics - - Taxation, Subsidies, and Revenue - - - Other
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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