Working Paper Series
Taxation and Entrepreneurship in a Welfare State
Abstract: Does 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.
Keywords: Entrepreneurship; Self-employment; Taxation; Welfare state; (follow links to similar papers)
JEL-Codes: H20; J23; L26; (follow links to similar papers)
38 pages, June 10, 2009
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- This paper is forthcoming as:
Stenkula, Mikael, 'Taxation and Entrepreneurship in a Welfare State', Small Business Economics.
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