Tax progressivity and self-employment: evidence from Canadian provinces

We examine the effects of personal income tax progressivity—in the sense of rising marginal income tax rate—on self-employment. The impacts of income tax progressivity on self-employment depend on the relative effects of taxing success and the presence of tax evasion opportunities. Empirical estimates using Canadian provincial data for the period 1979–2006 indicate that there is a negative association between income tax progressivity and self-employment. This suggests that the adverse impact of income tax on entrepreneurial risk-taking outweighs the tax evasion opportunities for the self-employed. An important implication of our results is that a reduction in income tax progressivity encourages self-employment. The empirical estimates are robust to the various sensitivity checks.     

Tax Policy and Entrepreneurship: New Time Series Evidence

Have tax policies affected entrepreneurial activity in the U.S.? We extend the time series literature on this topic by using more recent data and modern econometric techniques to examine the importance of federal income, payroll, capital gains, corporate income, and estate taxes on self-employment rates. Regression results show that most of these taxes have significant but small effects on self-employment activity. A battery of cointegration and causality tests confirms the general finding that taxes can have significant influences on entrepreneurship, but they are likely to be ineffective tools for generating meaningful changes in entrepreneurial activity.     

The Determinants of Latent Entrepreneurship in Japan

This paper examines regional characteristics affecting the latent entrepreneurship in Japan, focusing on regional macroeconomic indicators, existing density of establishments and human capital, and business start-up assistance programs by local governments. We define two types of people having the latent entrepreneurship as follows (1) persons merely wishing to be a self-employed worker, and (2) persons preparing to be a self-employed worker out of the former definition. Total cash earnings and the unemployment rate, which are the macro economic indicators, had positive effects on latent entrepreneurship in Japan. Judging from the significance of their estimations, the latent entrepreneurship is explained by the “Push hypothesis”. If we examine the problem more closely, it is necessary for us to identify government assistance programs which make the latent entrepreneurs more self-employment.     

Entrepreneurship in the Region: Breeding Ground for Nascent Entrepreneurs?

This paper employs data from the German Socioeconomic Panel (SOEP) and data from the German Social Insurance Statistics to study nascent entrepreneurship. In particular, micro data from the SOEP characterizing employees and nascent entrepreneurs is combined with data characterizing the entrepreneurial environment. The principal findings suggest that individuals are embedded in their local entrepreneurial environment which influences an individual especially at the beginning of the decision process about whether to become self-employed. Work and previous self-employment experience is more important than formal education for the likelihood of being a nascent entrepreneur. Furthermore, social capital is an important stimulus for nascent entrepreneurs. Finally, the results indicate that financial assets are less important for nascent entrepreneurs.     

Patterns of ethnic self-employment in time and space: evidence from British Census microdata

The over-representation of certain ethnic minority and immigrant groups in self-employment is, in common with other developed countries, a notable feature of the UK labour market. Compared to the substantial growth in self-employment in the 1980s, the 1990s saw overall self-employment rates plateau. Despite this, some minority groups experienced continued growth whilst others, particularly Chinese and Indian males and Pakistani, Bangladeshi and Chinese females, saw their self-employment rates decline. In this paper we use microdata samples from the 1991 and 2001 Censuses to investigate the dynamic and spatial patterns of ethnic entrepreneurship. Using decomposition methods we find that, for males from the Asian groups, changes in observable characteristics associated with an increasing proportion of second-generation individuals explain much of the decline in self-employment. This, which is also true of Chinese females, reflects in part the age structure and educational experiences of the second generation. The dynamics of Black male and Pakistani/Bangladeshi male and female entrepreneurship are less easy to explain. We also find that, while there is no evidence of self-employment being an “enclave” phenomenon, local economic conditions do affect rates of entrepreneurship for some groups, notably Pakistanis and Bangladeshis.     

Modelling Entrepreneurship: Unifying The Equilibrium and Entry/Exit Approach

Two approaches can be distinguished with respect to modelling entrepreneurship: (i) the approach focusing on the net development of the number of entrepreneurs in an equilibrium framework and (ii) the approach focusing on the entries and exits of entrepreneurs. In this paper we unify these approaches to arrive at a model explaining the equilibrium and actual number of entrepreneurs and the entry and exit rate of entrepreneurs simultaneously and consistently. We apply our unified approach to the Netherlands using self-employment data for the 1960–1999 period. We find error-correction of about 20% per year and a very different situation in terms of disequilibrium before and after the early 1980s. Periods of high unemployment appear to be characterized by both high entry and high exit rates.     

Moving on from nascent entrepreneurship: measuring cross-national differences in the transition to new business ownership

Nascent entrepreneurship and new business ownership are subsequent stages in the entrepreneurial process. We illustrate how information from the largest internationally harmonized database on entrepreneurship, the Global Entrepreneurship Monitor project, can be used to approximate the entrepreneurial process. We make a methodological contribution by computing the ratio of new business ownership to nascent entrepreneurship in a way that reflects the transition from nascent to new business ownership and provides cross-nationally comparable information on the efficiency of the entrepreneurial process for 48 countries. We report evidence for the validity of the transition ratio by benchmarking it against transition rates obtained from longitudinal studies and by correlating it with commonly used entrepreneurship indicators and macro-level economic indices. The transition ratio enables future cross-national research on the entrepreneurial process by providing a reliable and valid indicator for one key transition in this process.     

我国个人所得税累进性的实证分析:1995-2006

税收累进性是评价税制公平性的重要标准之一。在对税收累进性测量方法梳理和述评的基础上,实证分析了1995-2006年间我国个人所得税的累进性,得到以下结论:除低收入户、中等偏下户和最高收入户某些年份出现累退情况外,其余收入阶层都是累进的:个人所得税制是累进的,且除2001-2002年外,累进性变动轨迹是唯一的。不过,总体累进性呈下降趋势。随后,进一步进行成因分析,并提出相应的政策建议。     

How much of a socialist legacy? The re-emergence of entrepreneurship in the East German transformation to a market economy

We investigate how institutional change—the transition from a socialist system to a western type market economy—relates to the re-emergence of entrepreneurship in East Germany. This region is particularly well suited for such a study because of the rapid change of the institutional framework and the possibility to use West Germany as a benchmark. It took about 15 years until self-employment levels in East Germany reached those of West Germany. Despite this catch up, we find a number of peculiarities in East German self-employment that appear to be a continuing legacy of the socialist period. There is also a considerable correspondence of the regional levels of self-employment before, during and after the socialist period, suggesting the existence of a long-lasting regional entrepreneurship culture that can be regarded as an informal institution. This is in line with the hypothesis that informal institutions change much more slowly than formal institutions.     

我国个人所得税再分配效应及累进性的实证分析

税收是调节收入分配差距的有效手段之一。本文循着层层递进的逻辑,建立了税收再分配效应及累进性分解的数学理论模型,实证分析了1995年到2008年间我国个人所得税的再分配效应,剖析了影响其变动的深层次原因。结果表明:除2006年外,我国个人所得税起到了正向、且进一步加强的再分配效应,但调节效果非常有限;平均税率明显偏低,累进性基本呈下降趋势;分类征收模式导致总体累进性下降,工资薪金所得税是个人所得税累进性的主要来源;免征额在工资薪金所得税的累进性中起主导作用,其次是税率结构,而社会保障支出起较小的累进(或累退)效果。因此,在公平视角下改革与完善我国个人所得税制迫在眉睫。     

Who skims the cream of the Italian graduate crop? Wage employment versus self-employment

This paper tests whether academic achievement is a significant determinant of employment status in the Italian labor market: are new entrepreneurs selected from the top or bottom end of the graduate ability distribution? Is the cream of the graduate crop pulled into self-employment by the higher expected earnings or are individuals with lower degree score pushed into entrepreneurship by poor alternatives? Our data show a strong negative relation between academic achievement and self-employment status, i.e., we find skimming of the best graduates into wage and salary work.     

What makes a die-hard entrepreneur? Beyond the ‘employee or entrepreneur’ dichotomy

The article makes three contributions to the economics literature on entrepreneurship. We offer a new measure of entrepreneurship which accounts for variations in persistence in self-employment and as a result avoids the weakness of approaches which categorise an individual as an entrepreneur by observing their occupation at just one point in their career. We outline an econometric methodology to account for this approach and find, via a statistical test of model selection, that it is superior to probit/logit models, which have dominated the literature. While our results indicate that this existing literature is good at explaining an individual’s propensity to try self-employment, we find that entrepreneurial persistence is determined by a different model and unearth some new insights. Early self-employment encourages entrepreneurial persistence. For men, inheritance encourages persistence, and facilitates initial self-employment. Having a self-employed father as a role model makes sons persist longer. However, somewhat surprisingly, early experience of unemployment does not affect the probability of self-employment, while reducing persistence. The popular ‘unemployment push effect’ is thus rejected in our sample.

Switching to self-employment can be good for your health

Relying on theoretical insights from the Job Demand-Control model, which links occupational characteristics to health, this paper provides the first causal evidence of the physical and mental health consequences of self-employment. I utilize German longitudinal data for the period 2002–2014 and difference-in-differences estimations to study switches from unemployment to self-employment (necessity entrepreneurship) and transitions from regular- to self-employment (opportunity entrepreneurship). I find that necessity entrepreneurs experience improvements in their mental but not physical health, while opportunity entrepreneurship leads to both physical and mental health gains. Importantly, the health improvements cannot be explained by changes in income or working conditions and are not driven by personality and risk preferences or the local unemployment conditions. As such, the findings highlight an additional non-monetary benefit of self-employment and have implications for entrepreneurship theory and practice, current and would-be entrepreneurs, as well as policy-makers.     

Inequality and entrepreneurial thresholds

We explore the relationship between inequality and entrepreneurial activity. Drawing on cross-sectional data from a largescale survey of the economic conditions of individuals across India, we develop a number of dimensions of inequality to explore empirically how inequality interacts with entrepreneurship, operationalized as self-employment or as employing other people. We find compelling evidence that there are thresholds to becoming self-employed, and even more so to assembling the combinations of resources and personal attributes required to become an employer. Greater inequality leaves more people unable to make the transition to self-employment, leaving casual laboring as the occupation of necessity. At the same time, inequality increases the number of employers in a society, by concentrating resources - particularly land and finance - enough for significant numbers of people to be able to cross this higher threshold. Lastly, greater differentiation into social or religious groups curtails the ability to cross either entrepreneurial threshold, presumably by limiting the extent and benefits of social networks of value for entrepreneurship.     

“Misfits,” “stars,” and immigrant entrepreneurship

Prior research has shown that immigrants are more likely than natives to become entrepreneurs, and that entrepreneurs are disproportionately drawn from the extremes of the ability distribution. Using a large panel of US residents with bachelors’ degrees in scientific fields, we ask whether higher rates of entrepreneurship among immigrants can be explained by their position on the ability spectrum and establish four new facts about science-based and immigrant entrepreneurship. First, in this sample, an immigrant entrepreneurship premium exists only in science-based entrepreneurship. Second, this premium persists after controlling for ability (measured by paid employment wage residuals.) Third, a U-shaped relationship between ability and entrepreneurship exists only in non-science entrepreneurship; for science entrepreneurship, the relationship is increasing. Finally, the immigrant premium in science entrepreneurship is largest among immigrants with non-US degrees and those from non-English-speaking or culturally dissimilar countries. Stated preferences for self-employment do not explain the immigrant premium. The results suggest that immigrants may on average have higher levels of unobservable skills related to entrepreneurship.     

A metacultural approach to predicting self-employment across the globe

Drawing from neo-institutional theory, we examine the relationship between preference for entrepreneurship and actual entrepreneurship behavior across multiple countries and cultures. We elucidate how multiple societal-level cultural models, namely Hofstede, Global Leadership and Organizational Behavior Effectiveness (GLOBE), and Schwartz affect the individual-level process connecting expressed preference for self-employment and actual behavior. Our hypotheses were tested using a multilevel technique on a sample of 20,755 individuals across 24 countries. The findings indicate that the moderating effect of predominant cultural cognition is partially supported. Contributions and implications for theory and practice are also discussed.     

Women's self-employment: An act of institutional (dis)integration? A multilevel,cross-country study

In this paper we investigate the extent to which gender equality disintegrates women's self-employment choice (compared to that for men) and whether this is contingent upon a country's development stage and industries. We rely on symbolic interactionism to argue that employment choices emerge from an interactive conversation between individual and social institutional processes. Using data from 61 countries, we find that overall gender equality is associated with the gender gap in men's and women's self-employment choices and that this association depends upon the country's development stage and industries. Contributions are made to women's entrepreneurship and institutional theory.     

Regional knowledge,entrepreneurial culture,and innovative start-ups over time and space―an empirical investigation

We investigate the role of entrepreneurship culture and the historical knowledge base of a region on current levels of new business formation in innovative industries. The analysis is for German regions and covers the time period 1907–2014. We find a pronounced positive relationship between high levels of historical self-employment in science-based industries and new business formation in innovative industries today. This long-term legacy effect of entrepreneurial tradition indicates the prevalence of a regional culture of entrepreneurship. Moreover, local presence and geographic proximity to a technical university founded before the year 1900 is positively related to the level of innovative start-ups more than a century later. The results show that a considerable part of the knowledge that constitutes an important source of entrepreneurial opportunities is deeply rooted in history. We draw conclusions for policy and for further research.     

Gender gap in latent and nascent entrepreneurship: driven by competitiveness

This study highlights the relevance of gender differences in competitiveness for the gender gap in latent and nascent entrepreneurship. Using data obtained from a recent large-scale survey conducted in 36 countries, we find that individuals who like situations in which they compete with others are more likely to have a preference for being self-employed (latent entrepreneurs) and are also more likely to take steps to start new businesses (nascent entrepreneurs). Moreover, our results suggest that women are less competitively inclined than men in almost all countries in our sample and are also less willing to take risks. The results of a decomposition analysis suggest that gender differences in competitiveness and risk taking contribute significantly to the gender gap in latent and nascent entrepreneurship. Gender differences in competitiveness seem to be relevant, especially for the gender gap in nascent entrepreneurship.     

Gender and field of study as determinants of self-employment

This article concentrates on gender differences among university graduates with respect to self-employment. We investigate the characteristics of self-employed men and women, focusing in particular on the contribution of field of study as a determinant of the gender gap in self-employment rates. Our approach is based on probit regressions and on the application of a non-linear decomposition technique to the gender gap in self-employment. We find that age and field of study account for two-thirds of the observed gender gap in self-employment.