Tax Incentives and Entrepreneurship: Measurement and Data Considerations

Schuetze, Herbert J.

doi:10.1007/978-0-387-72288-7_10

Cited by 6 publications

(5 citation statements)

References 37 publications

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“…In fact, some authors have also used data on self-employment as an empirical proxy for entrepreneurship in other related fields, for instance, to build and adjust a model of occupational choice that allows for entrepreneurial entry and exit, in addition to investment decisions in the presence of borrowing constraints [22]; to study the relationship of the effective corporate tax rate with, among others, entrepreneurial activity [23]; to analyze the process of selection into self-employment over the life cycle and the determinants of self-employment earnings [24]; to discuss the link between self-employment and entrepreneurship in urban and rural labor markets [25]; even to model the individual's movement from wage work into entrepreneurship [26]. Ultimately, the use of the data on self-employment as a proxy of entrepreneurship carried out in this paper has been consistent with a proper methodology from earlier works [27][28][29][30].…”

Section: Theoretical Frameworksupporting

confidence: 61%

“…The analysis of the second variable discussed in the research relating to taxes has led to a large divergence in findings of the literature review. Some authors have even come to affirm that the current economic theory suggests that a country's tax system may have complex and ambiguous effects on the level of entrepreneurship [30]. From a practical point of view, some empirical studies have verified a lack of unanimity on the issue, contrary to what had been raised from a theoretical perspective.…”

Section: Theoretical Frameworkmentioning

confidence: 98%

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An Empirical Study for European Countries: Factors Affecting Economic Growth and Self-Employment by Gender

2020

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In economic literature, the relationship between entrepreneurship and economic growth has been widely discussed for some time now. In addition to the different theoretical approaches, a considerable amount of empirical works in recent decades have sought to verify the direct link between both variables by analyzing datasets from several distinct geographic areas. On one hand, it highlights the absence of a common indicator to measure entrepreneurship in practice relating to a country’s economic growth; on the other hand, it shows a great diversity of factors determining them. With the aim of providing new empirical evidence in the field of European entrepreneurship, this paper has analyzed data relating to 31 European countries over the last decade by introducing self-employment as an empirical proxy of entrepreneurship. In particular, this study contrasts the positive effect of public expenditure, investment, human capital, and entrepreneurship on economic growth for a wide range of countries and examines the impact of some economic and educational variables on self-employment, such as unemployment, taxes, education, and early school leaving. The estimation method used in this research had to consider the Ordinary Least Squares through a multiple regression model of constant coefficients based on annual Eurostat statistics for the period of 2010 to 2019. The results obtained verify the positive effect of public expenditure, investment, human capital, and entrepreneurship on economic growth. Moreover, the analysis of other factors affecting entrepreneurship, segregated by gender, shows how unemployment and the level of education have a positive impact on self-employment, while significant increases in the tax rate on capital and early school leaving harmed such variable. No significant differences were found between males and females.

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Section: Theoretical Frameworksupporting

confidence: 61%

Section: Theoretical Frameworkmentioning

confidence: 98%

An Empirical Study for European Countries: Factors Affecting Economic Growth and Self-Employment by Gender

2020

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“…Although published data on the self-employed are far from perfect, it is important to analyze these numbers, if only to detect possible trends and to raise questions that would lead to improved federal and state data collection and reporting. For example, there is on the one hand much underreporting of self-employment due to tax shirking (Schuetze, 2008), but on the other hand the self-employment numbers are exaggerated: when the same individual engages in different types of self-employment (e.g., consulting versus yard maintenance), a job is counted each time that a Tax Form 1040, Schedule C, or SE is filed. Furthermore, census surveys reported by the Bureau of Labor Statistics show much lower counts of self-employed than do the Department of Internal Revenue Service filings, and many small businesses that are incorporated are not reflected in these self-employment counts (Goetz et al, 2010).…”

mentioning

confidence: 99%

The Economic Impacts of Self-Employment

Goetz

Fleming

Rupasingha

2012

J. Agric. Appl. Econ.

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Even as self-employment continues to increase, policymakers remain largely unaware of this trend and fail to see it as an opportunity for addressing enduring joblessness. In part, this is explained by limited data on the self-employed and by widespread perceptions that returns to self-employment are low; that the self-employed are merely patching together piecemeal work opportunities requiring limited skills; and that there are no local economic impacts or spillover benefits into other sectors. Contrary to these perceptions, recent studies suggest that self-employment has tangible positive economic impacts not only on wage and salary employment but also on per capita income growth and poverty reduction. This article synthesizes the pertinent emerging literature and assesses dynamics of the lags involved between self-employment shocks and subsequent employment growth.

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“…Finally, one could argue that the reversal in the business ownership rate may be the result of structural changes having strong effects on occupational choice decisions and, therefore, on the elasticity of substitution between paid-employment and self-employment. In particular, we may hypothesise that the above factors, in conjunction with the emergence of incentives schemes, such as subsidies or tax allowances [33][34][35][36][37], and a progressive reduction in the rights and benefits derived from employment protection legislation may have introduced substantial changes in the risk-adjusted relative earnings of paid employment and self-employment [38][39][40][41][42][43][44][45]. Thus, one could argue that higher levels of entrepreneurship may indicate that extant job creators are not creating attractive wage-earning job opportunities as a result of a low valuation of the risk associated with self-employment.…”

Section: Literature Reviewmentioning

confidence: 99%

On the Substitutability between Paid-employment and Self-employment: Evidence from the Period 1969–2014 in the United States

2019

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This paper provides estimates of the elasticity of substitution between operational and managerial jobs in the US economy during the years 1969–2014, derived from an aggregate CES production function. Estimating the long-term relationship between (the log of) the aggregate employment/self-employment ratio and (the log of) the returns from paid-employment relative to self-employment and testing for structural breaks, we report different estimates of the elasticity of substitution in each of the two regimes identified. To this end we apply the methodology on instability tests proposed in Kejriwal and Perron (2008, 2010) as well as the cointegration tests developed in Arai and Kurozumi (2007) and Kejriwal (2008). Our results help to understand and interpret one of the most intriguing aspects in the evolution of self-employment rates in developed countries: the reversal of the trend in self-employment rates. Our estimates show that a higher level of development is associated with a greater number of entrepreneurs and smaller firms. Some rationales for understanding the growth of the elasticity between paid-employment and self-employment, including the recent trends in the digital economy, are also suggested.

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Tax Incentives and Entrepreneurship: Measurement and Data Considerations

Cited by 6 publications

References 37 publications

An Empirical Study for European Countries: Factors Affecting Economic Growth and Self-Employment by Gender

An Empirical Study for European Countries: Factors Affecting Economic Growth and Self-Employment by Gender

The Economic Impacts of Self-Employment

On the Substitutability between Paid-employment and Self-employment: Evidence from the Period 1969–2014 in the United States

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