Template-Type: ReDIF-Paper 1.0
Series: Tinbergen Institute Discussion Papers
Creation-Date: 2015-01-23
Number: 15-013/VII
Author-Name: Pourya Darnihamedani
Author-Workplace-Name: Erasmus University Rotterdam, the Netherlands
Author-Name: Joern Hendrich Block
Author-Workplace-Name: University of Trier, Trier, Germany
Author-Name: Jolanda Hessels
Author-Workplace-Name: Erasmus University Rotterdam, the Netherlands
Author-Name: Aram Simonyan
Author-Workplace-Name: National Academy of Science of the Republic of Armenia, Yerevan, Republic of Armenia
Title: Start-up Costs, Taxes and Innovative Entrepreneurship
Abstract: Prior research suggests that start-up costs and taxes negatively influence entry into entrepreneurship. Yet, no distinction is made regarding the type of entrepreneurship, particularly innovative versus non-innovative entrepreneurship. Start-up costs, being one-off costs, may reduce the entry of entrepreneurs whose ideas are not very promising, thus increasing the proportion of innovative entrepreneurs. Taxes, being recurring costs, may reduce the “prize” of innovation and the profit from entrepreneurship, discouraging individuals with innovative business ideas from becoming entrepreneurs. Analyzing a dataset of 632,116 individuals, including 43,223 entrepreneurs from 53 countries, we can confirm our main predictions. Our paper contributes to the discussion on how governmental regulation costs and taxes influence innovative entrepreneurship and technological deve lopment.
Classification-JEL: H24, H25, L26, L51, O31
Keywords: Innovative entrepreneurship, corporate taxes, personal income taxes, start-up costs, entrepreneurial profit
File-Url: https://papers.tinbergen.nl/15013.pdf
File-Format: application/pdf
File-Size: 214343 bytes
Handle: RePEc:tin:wpaper:20150013