Some Additional Evidence on the Interplay between Corruption, Tax Policy, and Firm Entry Using US States
11 Pages Posted: 7 Dec 2016
Date Written: December 6, 2016
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: Suggested Citation