Taxation and Entrepreneurship in a Welfare State
IFN Working Paper No. 800
39 Pages Posted: 25 Jun 2009 Last revised: 30 Jan 2011
Date Written: June 18, 2009
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
JEL Classification: H2, J23, L26
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Explaining National Differences in the Size and Industry Distribution of Employment
By Steven J. Davis and Magnus Henrekson
-
Explaining National Differences in the Size and Industry Distribution of Employment
By Steven J. Davis and Magnus Henrekson
-
The Effects on Sick Leave of Changes in the Sickness Insurance System
By Magnus Henrekson and Mats Persson
-
Wage-Setting Institutions as Industrial Policy
By Steven J. Davis and Magnus Henrekson
-
Wage-Setting Institutions as Industrial Policy
By Steven J. Davis and Magnus Henrekson
-
Employer Size and the Wage Structure in U.S. Manufacturing
By Steven J. Davis and John Haltiwanger
-
Designing Efficient Institutions for Science-Based Entrepreneurship: Lessons from the US and Sweden
By Magnus Henrekson and Nathan Rosenberg
-
Gazelles as Job Creators - A Survey and Interpretation of the Evidence
By Magnus Henrekson and Dan Johansson
-
Industrial Policy, Employer Size, and Economic Performance in Sweden
By Steven J. Davis and Magnus Henrekson