Working Paper Series,
Research Institute of Industrial Economics

Abstract: We study the effect of taxation on entrepreneurship, taking into account both the amount of entry and the quality of new ventures. We show that even with risk neutral agents and no tax evasion progressive taxes can increase entrepreneurial entry, while reducing average firm quality. So called "success taxes" increase startup of lower value business ideas by reducing the option value of pursuing better projects. This suggests that the most common measure used in the literature, the likelihood of entry into self-employment, may underestimate the adverse effect of taxation.

Keywords: Taxation; Entrepreneurial Entry; Quality of Entrepreneurial Firms

JEL-codes: H24; H25; L26

46 pages, First version: November 13, 2009. Revised: October 30, 2013.

Full text files

wp813.pdf  

Download statistics

Published as

Andrea Asoni and Tino Sanandaji, (2014), 'Taxation and the Quality of Entrepreneurship', Journal of Economics, vol 113, no 2, pages 101-123

• Research Institute of Industrial Economics
• Ordering Working Papers
• Home page for this series

Questions (including download problems) about the papers in this series should be directed to Elisabeth Gustafsson ()
Report other problems with accessing this service to Sune Karlsson ().

RePEc:hhs:iuiwop:0813This page generated on 2024-09-13 22:15:49.