nep-ent New Economics Papers
on Entrepreneurship
Issue of 2016‒08‒28
four papers chosen by
Marcus Dejardin
Université de Namur

  1. The Opportunity Costs of Entrepreneurs in International Trade By Timothy J. Kehoe; Pau S. Pujolas; Kim J. Ruhl
  2. The effects of size-based regulation on small firms: evidence from VAT threshold By Jarkko Harju; Tuomas Matikka; Timo Rauhanen
  3. Youth Entrepreneurship in Uganda: Policy, Evidence and Stakeholders By Anonymous
  4. The Persistent Power of Behavioral Change: Long-Run Impacts of Temporary Savings Subsidies for the Poor By Simone Schaner

  1. By: Timothy J. Kehoe; Pau S. Pujolas; Kim J. Ruhl
    Abstract: We show that a trade model with an exogenous set of heterogeneous firms with fixed operating costs has the same aggregate outcomes as a span-of-control model. Fixed costs in the heterogeneous-firm model are entrepreneurs’ forgone wage in the span-of-control model.
    JEL: D31 D43 F12
    Date: 2016–08
  2. By: Jarkko Harju; Tuomas Matikka; Timo Rauhanen
    Abstract: Various types of size-based regulations for firms are typical in most countries (tax schedules, accounting rules, health and safety standards etc.). However, there is only limited evidence of how owners of small firms respond to such rules, and what are the underlying mechanisms behind the observed behavior. We study these questions by examining the effects of the value-added tax (VAT) sales threshold using tax register data on the universe of Finnish firms and their owners. We find sizable bunching of firms in the sales distribution just below the VAT threshold. This implies that small firms actively avoid VAT liability. We utilize variation in both the VAT rate and reporting requirements to provide compelling evidence that the response is caused by the compliance costs of VAT reporting rather than the size of the tax rate. This shows that the costs related to reporting and understanding taxes induce greater distortions than pure tax incentives, especially among low-income entrepreneurs. In addition, we find no explicit evidence of avoidance or evasion, which suggests that firms respond by reducing their true output. Also, bunching behavior is very permanent, implying that the VAT threshold hinders the growth of small firms.
    Keywords: Value-added tax, compliance costs, small firms, entrepreneurs, bunching
    JEL: H32 L11 D22 H25
    Date: 2016–06–14
  3. By: Anonymous
    Abstract: Youth unemployment and underemployment pose a formidable challenge for the Government of Uganda. As a result, the government has embraced youth entrepreneurship as an avenue to expand employment opportunities. This report sheds light on the developments of youth entrepreneurship policies in the country. In a bid to increase research uptake and the use of evaluation evidence in policy formulation and programming, this report analyses and provides a perspective on youth entrepreneurship along three interrelated dimensions: policy, evidence and stakeholders. The objective therefore is to determine to the extent to which youth entrepreneurship policies in Uganda are evidence based and the nature of the stakeholders involved in the decision-making process. With regard to methods, the study reviewed previous research and impact evaluations of different programme packages on business and labour market outcomes in Uganda and beyond.
    Keywords: Consumer/Household Economics, Financial Economics, Industrial Organization, Institutional and Behavioral Economics, Labor and Human Capital, Productivity Analysis, Research and Development/Tech Change/Emerging Technologies,
    Date: 2015–05
  4. By: Simone Schaner
    Abstract: I use a field experiment in rural Kenya to study how temporary incentives to save impact long-run economic outcomes. Study participants randomly selected to receive large temporary interest rates on an individual bank account had significantly more income and assets 2.5 years after the interest rates expired. These changes are much larger than the short-run impacts on experimental bank account use and almost entirely driven by growth in entrepreneurship. Temporary interest rates directed to joint bank accounts had no detectable long-run impacts on entrepreneurship or income, but increased investment in household public goods and spousal consensus over finances.
    JEL: D14 O1 O12
    Date: 2016–08

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