Some Additional Evidence on the Interplay between Corruption, Tax Policy, and Firm Entry Using US States

11 Pages Posted: 7 Dec 2016

See all articles by John A. Dove

John A. Dove

Troy University - Manuel H. Johnson Center for Political Economy

Date Written: December 6, 2016

Abstract

The effects that corruption and tax policy have on entrepreneurship and firm growth have been often studied in the literature. This current paper adds to that literature by evaluating how the interaction effect between corruption and tax policy influences firm entry at the US state level, using a panel data set of all 50 US states between 2001 and 2014. Overall, the findings are consistent with the literature and suggest that while high levels of corruption and relatively burdensome tax policy have a negative effect on firm entry; high levels of corruption tend to dampen the negative effects associated with relatively high tax rates. Potential policy implications are discussed.

Keywords: Entrepreneurship, Corruption, Tax Policy, Firm Entry, Business Formation

JEL Classification: D22, D73, H71, H77, M13

Suggested Citation

Dove, John A., Some Additional Evidence on the Interplay between Corruption, Tax Policy, and Firm Entry Using US States (December 6, 2016). Applied Economics Letters, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2881686

John A. Dove (Contact Author)

Troy University - Manuel H. Johnson Center for Political Economy ( email )

Bibb Graves Hall
Troy, AL 36082
United States

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