The Role of Corporate Taxes in the Decline of the Startup Rate

Julian Neira and Rish Singhania

No 472, 2018 Meeting Papers from Society for Economic Dynamics

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
New Economics Papers: this item is included in nep-acc, nep-ent, nep-pbe and nep-sbm
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Related works:
Journal Article: The role of corporate taxes in the decline of the startup rate (2022)
Working Paper: The Role of Corporate Taxes in the Decline of the Startup Rate (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed018:472

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