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on Entrepreneurship |
| By: | Massenz, Gabriella (Research Institute of Industrial Economics (IFN)) |
| Abstract: | What leads self-employed entrepreneurs to incorporate? I examine how tax incentives interact with the cost of incorporation to answer this question. I exploit the abolition of minimum capital requirements to set up a limited liability company in the Netherlands and compare entrepreneurs that differ in their incentive to incorporate but that are otherwise comparable. After the reform, entrepreneurs whose pre-reform taxable income was closest to a kink where marginal personal income tax rates steeply increase are more likely to start a corporation. Total tax paid by these entrepreneurs is significantly reduced, which suggests they are able to reap the tax benefits of conducting business activity as a corporation. However, there seems to be no significant impact on total business activity – at least in the short term. Finally, there appears to be no significant difference in the probability that business owners own an unincorporated business, which suggests that many entrepreneurs operate a corporation alongside an unincorporated firm. |
| Keywords: | Incorporation; Organizational form; Minimum capital requirements; Income shifting |
| JEL: | H25 H26 H32 |
| Date: | 2025–12–16 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:iuiwop:1547 |
| By: | Pierre-Louis Vézina; Cevat Giray Aksoy; Piotr Lewandowski |
| Abstract: | We examine business creation by Ukrainian refugees in Poland following the Russian invasion. We find that Ukrainians started 38, 833 firms in 2022–23, accounting for 7% of all registrations. Our survey shows that 58% of post-invasion Ukrainian founders are refugees, and cross-county regressions show that a 10% increase in adult male Ukrainian refugees is associated with a 2.7% increase in Ukrainian firm registrations. We then show that new Ukrainian businesses stimulate Polish entrepreneurship. Using a shift-share strategy based on refugee shocks and Ukrainians’ comparative advantage, we find that a 10% increase in Ukrainian registrations led to 2.3% more Polish firms. |
| Keywords: | migration, firms, entrepreneurship, multiplier |
| JEL: | F22 L26 O15 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:ibt:wpaper:wp072025 |
| By: | Suleyman Faruk Gozen; David Hong; Mehmet Furkan Karaca |
| Abstract: | We study how non-rival intangible capital interacts with borrowing structure and financial frictions to shape firm dynamics over business cycles. We show: (i) the positive and significant association between intangible-capital growth and labor productivity growth becomes smaller in recessions; (ii) the non-rivalry of intangible capital is evident such that intangible growth predicts faster sales growth and broader firm scope, yet this relationship declines in recessions; (iii) intangible-intensive firms carry less total and secured debt, and substitute toward earnings-based covenant (EBC) borrowing over asset-based covenant (ABC) borrowing; and (iv) intangible-intensive firms with EBC have tightening financially constraints in recessions, which mitigates the productivity payoff of non-rival intangibles. We rationalize these patterns in a general-equilibrium model in which firms draw EBC/ABC constraints at entry and intangibles are non-rival in the firm production technology. The model yields a creditamplification mechanism with heterogeneous borrowing types, reconciling the productivity slowdown despite rising intangibles |
| Date: | 2025–04–02 |
| URL: | https://d.repec.org/n?u=RePEc:bri:uobdis:25/815 |
| By: | Ken Tabata (School of Economics, Kwansei Gakuin University) |
| Abstract: | Does reducing the corporate income tax while increasing the consumption tax to satisfy government budget constraints improve welfare? To address this question, this paper examines the welfare-maximizing consumption and corporate income tax rates within a Rivera-Batiz and Romer (1991)-type variety-expanding growth model with financial frictions and heterogeneous R&D productivity. We also explore how these welfare-maximizing tax rates change as financial constraints become less binding due to financial development. The results indicate that under mild and plausible levels of financial frictions, relaxing financial constraints on R&D investment lowers the optimal corporate income tax rate, while raising the optimal consumption tax rate. This finding implies that when financial constraints are eased, enhancing innovation at the expense of current production—by raising the consumption tax and reducing the corporate income tax—improves welfare. The underlying mechanism is that relaxing financial constraints induces entry into R&D only by highly productive entrepreneurs, thereby increasing the average efficiency of R&D investment. |
| Keywords: | Financial Frictions, Corporate Income Tax, Consumption Tax, R&D, Endogenous growth |
| JEL: | E62 H21 H25 O30 O38 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:kgu:wpaper:304 |
| By: | Bui Van, Vien; Vo Huu, Khanh; Tran The, Tuan |
| Abstract: | Export performance has become increasingly important for Vietnamese manufacturing SMEs as they face digital transformation and stronger global competition. This study investigates how resource-based determinants affect the export performance of Vietnamese manufacturing SMEs, with absorptive capacity (mediation) and international competition (moderation). Cross-sectional survey data from 420 manufacturing SMEs in Vietnam, collected during February–August 2025 and completed by authorized firm representatives (owners/ directors/ senior managers). Partial Least Squares Structural Equation Modeling (SmartPLS 4.1) with 5, 000 bootstraps was employed. Digital transformation (β = 0.304, p |
| Keywords: | exports; SMEs; RBV; absorptive capacity; competition; digital transformation |
| JEL: | F14 L25 O33 |
| Date: | 2025–12–22 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:127537 |
| By: | Leonardo Bonilla-Mejía; Luz A. Florez; Didier Hermida; Francisco Lasso-Valderrama; Leonardo Fabio Morales; José Pulido |
| Abstract: | We study the impact of payroll subsidies targeting SMEs on labor market formalization in developing economies, where informal labor markets are prevalent. Our evidence is based on a payroll subsidy program in Colombia (PAEF-stage 2) targeting firms under 50 employees that subsidized up to 50% of the payroll. We exploit detailed administrative records, as well as the discontinuity in the eligibility threshold and the timing of the program implementation to estimate the causal effect of the program. Our findings indicate that the subsidy had a positive and persistent effect on formal employment. The impact is larger for industries receiving more subsidies but does not vary across employees’ gender. Cost-benefit analysis shows that the program was financially sustainable, with internal rates of return ranging from 58% to 169%. *****RESUMEN: En este trabajo se analiza el impacto de los subsidios a la nómina dirigidos a pequeñas y medianas empresas sobre la formalización laboral en una economía en desarrollo, donde los mercados laborales informales son predominantes. Nuestra evidencia se basa en la segunda fase del Programa de Apoyo al Empleo Formal (PAEF) en Colombia, que otorgó subsidios de hasta el 50% de la nómina a empresas con menos de 50 empleados. Se usan registros administrativos detallados, así como la discontinuidad en el umbral de elegibilidad y el momento de implementación del programa, para estimar su efecto causal. Los resultados indican que el subsidio tuvo un efecto positivo y persistente sobre el empleo formal. El impacto fue mayor en los sectores que recibieron mayores montos de subsidio, pero no presentó variaciones según el género de los trabajadores. El análisis costo-beneficio muestra que el programa fue financieramente sostenible, con tasas internas de retorno que oscilan entre el 58% y el 169%. |
| Keywords: | Payroll subsidies, small and medium enterprises, informality, developing economies, Subsidios a la nómina, pequeñas y medianas empresas, informalidad, economías en desarrollo |
| JEL: | J68 J38 J23 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:bdr:borrec:1338 |