Scandinavian Working Papers in Economics

Working Paper Series,
Research Institute of Industrial Economics

No 826: Taxation, Labor Market Policy and High-Impact Entrepreneurship

Magnus Henrekson (), Dan Johansson () and Mikael Stenkula ()
Additional contact information
Magnus Henrekson: Research Institute of Industrial Economics (IFN), Postal: P.O. Box 55665, SE-102 15 Stockholm, Sweden
Dan Johansson: Ratio, Postal: Box 3203, SE-103 64 Stockholm, Sweden
Mikael Stenkula: Research Institute of Industrial Economics (IFN), Postal: P.O. Box 55665, SE-102 15 Stockholm, Sweden

Abstract: Public policy affects the prevalence and performance of both productive and high-impact entrepreneurship. High-impact entrepreneurship prospers when knowledge is successfully generated and exploited in the economy. This process depends on complementary key ac-tors who use their competencies in what we denote a competence bloc. Although variations in economic contexts make prescribing a general panacea impossible, a number of relevant policy areas that affect key actors can be identified. In this paper this is done in the areas of tax policy and labor market policy. It is shown that high and/or distortive taxes and heavy labor market regulations impinge on the creation and functioning of competence blocs, thereby reducing high-impact entrepreneurship.

Keywords: Entrepreneurship; Gazelles; High-growth firms; High-impact entrepreneurship Innovation; Institutions; Labor market policy; Tax policy

JEL-codes: H32; L25; L50; M13; O31; P14

33 pages, March 23, 2010

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