nep-ent New Economics Papers
on Entrepreneurship
Issue of 2018‒09‒17
four papers chosen by
Marcus Dejardin
Université de Namur

  1. The Role of Corporate Taxes in the Decline of the Startup Rate By Julian Neira; Rish Singhania
  2. Entrepreneurship, financial frictions and the welfare gains of business cycles By Merlin, Giovanni Tondin
  3. Immigrant Entrepreneurship in Finland By Fornaro, Paolo
  4. Employment and Output Effects of Federal Regulations on Small Business By Jang-Ting Guo; Dustin Chambers

  1. By: Julian Neira (University of Exeter); Rish Singhania (University of Exeter)
    Abstract: The Role of Corporate Taxes in the Decline of theStartup Rate∗Julian NeiraUniversity of ExeterRish SinghaniaUniversity of ExeterOctober 26, 2017AbstractThe business startup rate in the United States has exhibited a large secular declinein recent decades. The reasons behind the decline are not well understood. This paperhypothesizes that the startup rate declined in large part because corporate taxes raisedthe opportunity cost of entrepreneurship. We formalize this thesis using a model ofoccupational choice that features firm entry and exit. Quantitatively, the model accountsfor much of the decline in the startup rate. Taxes alone account for one-fifth of thedecline. Cross-sectoral patterns in US data support our results.
    Date: 2018
  2. By: Merlin, Giovanni Tondin
    Abstract: I propose a simple method to solve a heterogeneous agent model with entrepreneurship, financial frictions and aggregate uncertainty. Aggregate shocks, in this context, induce potential entrepreneurs to save in order to slack their financial constraints, leading to a significant increase in aggregate savings, pushing up wages and lowering interest rates. This channel can be strong enough to more than offset the effect of fluctuations on consumption, leading to welfare gains of business cycles.
    Date: 2018–08
  3. By: Fornaro, Paolo
    Abstract: Abstract Immigrant entrepreneurship is the subject of a prolific economic literature, as well as a source of wide public debate. This is because the participation of immigrants to the business community can provide a significant contribution to innovation and to market dynamics. This report touches multiple aspects of immigrant entrepreneurship in Finland, looking at the years from 2006 to 2014. I find that while the number of self-employed immigrants has increased dramatically, the entrepreneurial rate has been stable. Moreover, the immigrant self-employment rate is similar to the one of natives. I find that the median earnings of foreign entrepreneurs are lower than the ones of Finnish entrepreneurs, but this is driven by the different industry distribution. Finally, I find an overrepresentation of foreign workers and entrepreneurs in the Helsinki region, while the immigrants’ self-employment rate is higher in poorer areas. I gather multiple evidence pointing toward the fact that difficulties in the job market push foreign residents to self-employment. For example, I find a negative correlation between the employment rate and the foreign share of entrepreneurial inflows, and a strong negative relationship between the employment rate and the immigrant self-employment rate at the regional level.
    Keywords: Immigrants, self-employment, earnings differentials
    JEL: J24 J61 M13
    Date: 2018–09–13
  4. By: Jang-Ting Guo (Department of Economics, University of California Riverside); Dustin Chambers (Salisbury University)
    Abstract: This paper examines the disparate impact of US federal regulations on small businesses. In the context of a two-sector dynamic general equilibrium macroeconomic model, we obtain three empirically testable implications of higher regulation: 1) the total number of small firms is reduced, 2) the employment share of small firms shrinks, and 3) small firms’ share of total output declines. Since the first of these testable hypotheses has already been confirmed in previous studies, we focus our attention on the latter two, and find strong empirical support for both. Specifically, we estimate that a ten percent increase in federal regulations reduces the employment share of small firms by nearly 0.7%, and an equally large increase in federal regulations decreases the output share of small firms by nearly 1.5%.
    Keywords: regulation, small business, firm size, industry concentration, dynamic general equilibrium.
    JEL: C23 E23 L11 L51
    Date: 2018–09

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