Tax Incentives and Entrepreneurship: Measurement and Data Considerations

Abstract

Governments and economic actors around the world have instituted a vast array of programs to help foster entrepreneurship. Perhaps the most commonly utilized and complex policy tool available is the income-tax system. The interplay between tax policy and entrepreneurial activity has received a great deal of attention in the economics literature. While this literature has provided a great deal of knowledge regarding the effects of tax policy on entrepreneurship the work is far from complete. A number of the shortcomings in the literature result because of a lack of quality data focused on self-employment outcomes. The purpose of this chapter is to illustrate the current state of knowledge regarding the impacts of taxation on entrepreneurship, to identify areas in which additional research is particularly warranted and the data requirements necessary to fill in these gaps in the literature. JEL classification: H24, H25, J23, H26