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Taxation and the Quality and Quantity of Entrepreneurial Firms

SSRN Electronic Journal
2009
  • 7
    Citations
  • 2,883
    Usage
  • 0
    Captures
  • 0
    Mentions
  • 0
    Social Media
Metric Options:   Counts1 Year3 Year

Metrics Details

  • Citations
    7
    • Citation Indexes
      7
  • Usage
    2,883
    • Abstract Views
      2,717
    • Downloads
      166
  • Ratings
    • Download Rank
      360,099

Article Description

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 start-up 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.

Bibliographic Details

Andrea Asoni; Tino Sanandaji

Elsevier BV

Taxation; Entrepreneurial Entry; Quality of Entrepreneurial Firms

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