On the effectiveness of state tax and expenditure policies to encourage entrepreneurship

2019 ◽  
Vol 8 (4) ◽  
pp. 523-548
Author(s):  
Donald Bruce ◽  
Elizabeth A. Glass ◽  
Matthew C. Harris
Keyword(s):  
Small Firms ◽  
Statistical Significance ◽  
Entrepreneurial Activity ◽  
Empirical Literature ◽  
Tax Rates ◽  
Content Type ◽  
Entrepreneurial Performance ◽  
Self Employment ◽  
State Tax ◽  
Employment Rates

Purpose The purpose of this paper is to expand the empirical literature on state tax and expenditure policies and entrepreneurial activity in several meaningful ways. Design/methodology/approach The authors update the panel data to include several more recent years and also consider other elements of state policy. Findings The most important takeaway is that even after dealing with some of the known shortcomings of dynamic panel analysis, we are still not able to find economically meaningful impacts of state tax and expenditure policies (generally defined) on entrepreneurial performance. Research limitations/implications Earlier studies that have found statistical significance have generally been limited to extensive-margin impacts on such things as self-employment rates or counts of new or small firms. When the authors examine what policy makers actually care about – things like income and employment among entrepreneurial ventures – the authors do not find much in the way of useful policy impacts. Practical implications To be sure, the authors find entrepreneurial performance to be statistically significantly related to certain tax rates and expenditure amounts, but the magnitudes of our estimated results cast serious doubts on the usefulness of these particular policy levers for generating meaningful improvements in entrepreneurial success. Originality/value The authors’ primary contribution is to improve the empirical consideration of the time series properties of the data. The authors provide a battery of more general and robust analyses to more completely surround the question.

Financial development and self-employment

2020 ◽  
Vol 19 (3) ◽  
pp. 339-357
Author(s):  
Papar Kananurak ◽  
Aeggarchat Sirisankanan
Keyword(s):  
Data Analysis ◽  
Panel Data ◽  
Financial Development ◽  
Panel Data Analysis ◽  
Statistical Significance ◽  
Random Effect Model ◽  
Direct Examination ◽  
Content Type ◽  
Self Employment ◽  
The Impact

Purpose There are several different factors that can influence self-employment. However, there is little evidence stemming from direct examination of the impact of financial development (FD) on self-employment. This study aims to formulate empirical specification models to examine the effect of FD on self-employment. Design/methodology/approach Panel data analysis of 136 sample countries was performed during the period from 2000 to 2017. This study initially implemented the new financial index developed by the International Monetary Fund (IMF) to examine the impact of FD on self-employment. Panel data analysis including the pooled model, fixed effect and random effect model has been carried out. Findings The empirical results show that the financial institutions index has a negative significant impact on self-employment by a considerable magnitude, whereas the financial markets index does not show any statistical significance. The results also find that the government effectiveness index is negative and statistically significant on self-employment. Originality/value There are several different factors which can influence self-employment. Nevertheless, there is little evidence for the direct examination of the impact of FD on self-employment. This study investigated the impact of FD on self-employment by using the new FD index created by the IMF. The finding may help policymakers to implement FD along with other institutional policies to control self-employment.

Structural breaks in the central government taxes in India, 1950-1951 to 2013-2014

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Anita Rath
Keyword(s):  
Structural Breaks ◽  
Central Government ◽  
Empirical Literature ◽  
Tax Revenue ◽  
Tax Rates ◽  
Tax Structure ◽  
Relative Significance ◽  
Content Type ◽  
Simulation Exercise ◽  
Tax Regimes

Purpose The purpose of this paper is to find out the factors contributing to major shifts in the growth of tax revenue through the estimation of structural breaks and analysis of major tax regimes. Recent contributions to optimal tax theory and empirical literature on the Laffer curve effect, based on elasticity of taxable income, challenge the settled understanding on the rate-revenue relationship. In this backdrop, the objective of the paper is to find out the relative significance of changes in tax rate, tax base and administrative reforms in affecting the growth of tax revenue in India. The paper considers tax data spanning a period of six and half decades for five major components of direct and indirect taxes (corporation, personal income, customs, excise and service) of the central government of India. Design/methodology/approach Unknown break point(s) – single and multiple – in the tax structure are identified by using the Quandt-Andrews and Bai-Perron econometric tests. These tests were conducted for two models of growth of taxes (tax revenue and tax-NDP ratio) estimated using semi-log functions. A simulation exercise was conducted to find out the robustness of the results by varying the trimming parameter and number of breaks. An analytical framework is used to understand the factors associated with these breaks. Findings There is more than one break identified for every tax component as per the results of Bai–Perron test. The simulation exercise suggests that estimated breakpoints are mostly robust. Economic growth, structural changes in the economy, simplification and rationalization of tax structure, tax competition, policies such as liberalization have contributed to the changing tax regimes. Results of this study suggest that high tax rates have not been, in particular, detrimental to achieving growth in revenue and factors other than changes in tax rates have been more prominent in bringing about the shifts. Originality/value This is, perhaps, the first paper exploring the multiple structural breaks in the fiscal variables in India. It offers an understanding of the changing regimes of central government taxes and the underlying factors for the same.

The perceptions of Australian senior entrepreneurs on the drivers of their entrepreneurial activity

2018 ◽  
Vol 24 (1) ◽  
pp. 81-103 ◽  
Author(s):  
Aron Perenyi ◽  
Roxanne Zolin ◽  
Alex Maritz
Keyword(s):  
Mixed Methods ◽  
Mixed Methods Study ◽  
Policy Implications ◽  
Policy Support ◽  
Entrepreneurial Activity ◽  
Career Stage ◽  
Content Type ◽  
Self Employment ◽  
Start Up ◽  
Start Ups

Purpose Why is self-employment an attractive option for certain seniors and what drives seniors into business start-ups? In this study, the motivations and preferences of senior entrepreneurs in Australia, to become self-employed, by means of business start-ups, are explored. The purpose of this paper is to provide empirical basis for policy implications. Design/methodology/approach A mixed methods study is conducted. Members of the National Senior’s Association in Australia were interviewed and surveyed. The semi-structured interviews identified the key factors influencing senior entrepreneurs in relation to self-employment and entrepreneurial choices at a later career stage. The survey collected information on intentionality, motivation, skills, opportunities, success, satisfaction, participation, barriers, benefits, education and training, and perceptions of policy support for senior entrepreneurs. Findings Respondents gave an account of the prevalence of pull factors motivating their choice of an entrepreneurial career. Multivariate statistical analysis of survey responses showed that senior entrepreneurs are more driven by opportunity than necessity and are primarily internally motivated. Research limitations/implications Results of this study suggest a weak link between motivation by others and the act of start-up, but this may also imply that those seniors who are more likely to become entrepreneurs are more likely to ignore the impulses from their social context. This requires further investigation to ensure a robust identification of drivers and an elimination of contextual effects. Further research is suggested to compose a relevant model structure in different contexts and a representative sample to confirm the model outcomes. Originality/value This is the first mixed methods study of the antecedents of senior entrepreneurs’ start-up intentions in Australia. The study also uses entrepreneurial activity as opposed to intention as its dependent variable, which allows for a more accurate evaluation of antecedents to the senior entrepreneurship phenomenon.

scholarly journals Persistence in Self-Employment Rates before the Great Lockdown: The Case of the UK

2020 ◽  
Vol 12 (16) ◽  
pp. 6429
Author(s):  
Elisabeth Lopez-Perez ◽  
Ana Rodriguez-Santiago ◽  
Emilio Congregado
Keyword(s):  
Time Series ◽  
Unit Roots ◽  
Empirical Literature ◽  
Natural Rate ◽  
Probability Of Survival ◽  
Self Employment ◽  
Steady Growth ◽  
Macro Scale ◽  
Employment Rates ◽  
The Uk

A growing body of empirical literature—both on the micro and macro scale—is devoted to exploring the existence of hysteresis—or at least persistence—in self-employment, i.e., whether policy, economic or external shocks have transitory or persistent effects on the probability of survival, and in turn, on the natural rate of self-employment. In aggregate time series studies, the usual method to address this issue has been to look for unit roots by using alternative tests or by using unobservable components models. In this research, we performed a battery of tests and competing approaches to check the robustness of our results with UK self-employment time series. The UK is a suitable case for study because the recent evolution of the UK self-employment rate figures shows a steady growth since the beginning of the millennium. This long-term rise in UK self-employment has attracted the attention of scholars, at least, before the Great Lockdown. We find evidence of hysteresis, while business cycle output variations significantly affect self-employment rates. The article discusses the implications of the findings.

Performance and financing strategies of female and male entrepreneurs in the Republic of Serbia

2017 ◽  
Vol 9 (2) ◽  
pp. 136-156 ◽  
Author(s):  
Danijela Stošic Panić
Keyword(s):  
Gender Differences ◽  
Gender Gap ◽  
Statistical Significance ◽  
Entrepreneurial Activity ◽  
Categorical Variables ◽  
Female Entrepreneurs ◽  
Content Type ◽  
Net Profit ◽  
The Republic ◽  
The Relationship

Purpose The paper examines gender differences in the performance and financing strategies of female and male entrepreneurs in the Republic of Serbia. The aim of this study is to explore the gender dimension – a much under-researched aspect of entrepreneurship in the Republic of Serbia – and to link the findings with those of other environments. Design/methodology/approach To explore gender-based differences in entrepreneurial activity, a random sample of 327 units was drawn from the Serbian Business Registers Agency’s Register of Companies. In total, 101 completed questionnaires were received. The chi-square test of association was used to assess the relationship between two categorical variables, while the non-parametric Mann–Whitney U test was used to assess the statistical importance of the differences between groups of female and male entrepreneurs. The relationship between the performance and different sources of financing was assessed by multiple regression analysis. Findings The results confirm the existence of a gender gap in the net profit, employment growth rate, return on assets (ROA) and in use of various types of alternative financing sources. The evidence shows that those male entrepreneurs who use personal funds achieve lower levels of net profit and ROA compared to those who use internal business sources. Lower ROA is also achieved by those male entrepreneurs who use alternative sources of financing, relative to those who do not use these sources. Female entrepreneurs who applied for bank loans realized higher net profit value compared to those who did not apply for a loan. Moreover, female entrepreneurs who use some kind of state-supported funding achieve higher ROA than those who do not. Other gender differences found regarding the various aspects of the financing practices lacked statistical significance. Originality/value Although the generalizability of part of the findings is weakened due to the lack of statistical significance, most of the expected gender differences were found to exist at the sample level. This encourages further studies of similarities and differences between female and male entrepreneurs’ financing strategies and their impact on business performance. This is particularly important for the environments in which the gender aspect of entrepreneurial activity is under-researched.

scholarly journals Economic freedom and veto players jointly affect entrepreneurship

2017 ◽  
Vol 6 (3) ◽  
pp. 340-358 ◽  
Author(s):  
Jacob Lihn ◽  
Christian Bjørnskov
Keyword(s):  
Political Institutions ◽  
Government Spending ◽  
Entrepreneurial Activity ◽  
Veto Players ◽  
Correction Model ◽  
Content Type ◽  
Veto Player ◽  
Self Employment ◽  
Long Run ◽  
Short Run

Purpose The purpose of this paper is to explore how the strength of political veto players affects the long-run credibility of economic institutions and how they jointly affect entrepreneurial activity. Design/methodology/approach The authors employ an annual panel covering 30 OECD countries from 1993 to 2011. Findings An error correction model identifies a positive and significant short-run effect on self-employment from large government spending at low levels of veto player strength. A static model conversely indicates that smaller government spending is positively associated with entrepreneurship at lower levels of veto player strength in the long run. Originality/value The authors are the first to explore the interaction of economic and political institutions in the development of entrepreneurship.

Sri Lankan entrepreneurs in Australia: chance or choice?

2015 ◽  
Vol 22 (4) ◽  
pp. 782-796 ◽  
Author(s):  
Ramanie Samaratunge ◽  
Rowena Barrett ◽  
Tissa Rajapakse
Keyword(s):  
Human Capital ◽  
Case Studies ◽  
Influential Factors ◽  
Entrepreneurial Activity ◽  
Local Market ◽  
Sri Lankan ◽  
Content Type ◽  
Ethnic Entrepreneurship ◽  
Self Employment ◽  
Ethnic Entrepreneurs

Purpose – Ethnic entrepreneurship is, and always has been, a means of survival. However, there is limited literature on ethnic entrepreneurship in Australia and therefore, an understanding of ethnic entrepreneurs’ motivations to become self-employed. The purpose of this paper is to report the influential factors in the decision to engage in self-employment through case studies of members of Melbourne’s Sri Lankan community informed by the mixed embeddedness approach. Design/methodology/approach – The mixed embeddedness approach frames the study where the authors examine the motivations for business of five Sri Lankan entrepreneurs. Narratives are used to construct individual case studies, which are then analyzed in terms of the motivations for, resources used and challenges faced on the entrepreneurial journey. Findings – For these ethnic entrepreneurs, their entrepreneurial activity results from a dynamic match between local market opportunities and the specific ethnic resources available to them at the time of founding. The self-employment decision was not prompted by a lack of human capital but an inability to use that human capital in alternative means of employment at specific points in time. Moreover the authors highlight the importance of social and cultural capital as resources used to overcome challenges on the entrepreneurial journey. Originality/value – In this community, entrepreneurship was not a result of a lack of human capital but how it was utilized in combination with social and cultural capitals in the given opportunity structure. The mixed embeddedness approach enables the uncovering of how ethnic network ties were used in light of the opportunities available to build entrepreneurial activity.

What drives the growth of start-up firms? A tool for mapping the state-of-the-art of the empirical literature

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Roberto Pugliese ◽  
Guido Bortoluzzi ◽  
Marco Balzano
Keyword(s):  
Growth Factors ◽  
Statistical Significance ◽  
Empirical Studies ◽  
Three Dimensional ◽  
Empirical Literature ◽  
Potential Growth ◽  
Content Type ◽  
Fine Grained ◽  
Start Up ◽  
Research Stream

PurposeThis study aims to enrich the current theoretical debate on the growth of start-up firms by extensively investigating the ongoing empirical studies in this research stream. Moreover, this study identifies drivers whose support roles are confirmed in the literature and recommends further research opportunities.Design/methodology/approachIn this study, we analysed the results of 316 empirical studies on start-up firms and growth and also identified and categorised 66 growth drivers. We presented these drivers in three-dimensional charts: 1) the frequency of using each driver in the 316 studies, 2) the consistency of each driver as measured by the number of studies supporting its statistical significance and 3) the net effect (positive or negative) of each driver on growth.FindingsOur analysis compares extant studies on growth drivers and shows some under-explored growth factors of start-up firms.Practical implicationsBoth start-up managers and policymakers can benefit from this study. This study provided managers with a fine-grained tool on the main growth drivers and can guide policymakers in supporting policies for start-up firms.Originality/valueThis study provides a rich, fine-grained and coherent picture of several potential growth drivers of start-up firms. Moreover, we extended our analysis to various potential drivers more than previous studies on this topic, thereby providing fruitful insights into the critical growth factors for start-up firms.

The determinants of self-employment entry of Palestinian youth

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Rabeh Morrar ◽  
Mohamed Amara ◽  
Hélène Syed Zwick
Keyword(s):  
Young Adults ◽  
Young Women ◽  
West Bank ◽  
Empirical Literature ◽  
Curvilinear Relationship ◽  
Young Workers ◽  
Content Type ◽  
Self Employment ◽  
Micro Level ◽  
The Impact

Purpose This paper aims to study the impact of micro-level socio-economic, demographic and geographical factors on the likelihood of self-employment entry of young adults in Palestine and filling a gap in the analysis of determinants of self-employment for young adults in Palestine. Design/methodology/approach The research design is based on a multinomial logistic (MNL) model and on the testing of seven hypotheses deriving from the review of the theoretical and empirical literature, using a micro-level longitudinal data set from the Palestinian Labour Force Surveys (PLFS) between 2009 and 2016. In the analysis, the dependent variable (employment status) is a discrete variable that takes four unordered and independent outcomes: wage employee, self-employed, employer and unpaid family member. Findings This study has strong evidence that the likelihood of self-employment increases with age. However, results are inconsistent with the well-known curvilinear relationship between age and self-employment. Regarding the role of gender, results show that young men are more likely to become self-employed than young women. Results indicate that there is a significant and negative impact of an increasing level of education on self-employment entry for both youth and the whole population. On the opposite, training after graduation increases the likelihood of self-employment entry for youth with high education level. Besides, this paper finds that young workers living in urban areas have more likelihood to enter self-employment than those in rural areas and young workers in Gaza have more likelihood to enter self-employment than their counterparts in West Bank. Practical implications First, in both West Bank and Gaza, young women are less inclined to actively engage in self-employment, which confirms structural inequalities between men and women. Therefore, this study calls for social protection programmes and for national programmes that would promote and develop women’s self-employment. Second, because this paper finds that youth self-employment is more an opportunity-driven phenomenon than a necessity-driven one, this study calls for programmes that provide youth with small business grants and training on entrepreneurship and business models. Originality/value Insights are valuable as both government institutions and universities and entrepreneurial startups can benefit from knowing which factors contribute to the self-employment likelihood of youth in Palestine and use the policy recommendations to develop capacity-building programmes to provide the youth and women with skills and competencies which enable them to turn to self-employment.

Black entrepreneurship: a case study on entrepreneurial activities and ambitions in a South African township

2014 ◽  
Vol 8 (3) ◽  
pp. 162-179 ◽  
Author(s):  
Peter Preisendoerfer ◽  
Ansgar Bitz ◽  
Frans J. Bezuidenhout
Keyword(s):  
South Africa ◽  
Black Population ◽  
Entrepreneurial Intentions ◽  
Entrepreneurial Activity ◽  
Content Type ◽  
Structural Problems ◽  
Self Employment ◽  
Black Entrepreneurship ◽  
Entrepreneurial Activities

Purpose – The purpose of this article is to investigate the current self-employment rate as well as entrepreneurial intentions of the township’s population on the basis of an empirical case study of a single township. It is often assumed that the black population of South Africa (mostly living in townships) has a low participation rate in entrepreneurial activities and a low level of entrepreneurial ambitions. Besides the level of entrepreneurship, personal and socio-economic factors affecting participation in entrepreneurship are explored. Design/methodology/approach – The article uses a face-to-face survey of about 350 adult residents of the township under investigation. Findings – Contrary to the common assumption, entrepreneurial activity, which also includes all kinds of informal business ventures, cannot be qualified as low in the township under investigation. The same holds true for entrepreneurial ambitions, that is, people’s intentions to start their own business in the near future. The factors influencing the probability of self-employment are similar to what we know from many other studies in the field of entrepreneurship. Socio-demographic attributes (gender, age), human capital factors (schooling, health) and social network resources (membership of organizations, self-employed friends) are significant predictors of entrepreneurial activity. It proves to be difficult, however, to explain who, in fact, articulates entrepreneurial ambitions. Practical implications – The findings show that the basic prerequisites for expanding black entrepreneurship in South Africa are in place. Politically, it seems appropriate to initiate more public support programs for black entrepreneurship, as such programs can help to translate entrepreneurial ambitions into action. However, to stay realistic, the contribution of entrepreneurship to overcome the structural problems of deprivation and poverty of the black population of South Africa should not be overestimated. Originality/value – The article is based on a careful survey in a township using a random sample. Given the rare access to a disadvantaged township community, the result that there is no evidence of “lack of entrepreneurial impetus” deserves scientific and political attention.

Sign in / Sign up

Export Citation Format

Share Document