Entrepreneurship, Wealth Inequality, and Taxation. Meh, C. A. Review of Economic Dynamics, 8(3):688–719, Elsevier, 2005. Link doi abstract bibtex 2 downloads This paper investigates the importance of entrepreneurship when quantifying the aggregate and distributional effects of switching from a progressive to a proportional income tax system. I find that the distributional consequences of the tax reform in a model economy with entrepreneurs contrast markedly from those in a model economy with no entrepreneurs. The elimination of progressive taxation has a negligible effect on wealth inequality when entrepreneurship is considered but has a large effect when entrepreneurship is omitted. The framework used is an occupational choice model, in which the decision to become an entrepreneur is determined by the ability to manage a firm and by asset holdings. The calibrated economy can account for the high savings rate of entrepreneurs relative to non-entrepreneurs, and the high concentration of wealth observed in the data.
@article{Meh2005,
title = {Entrepreneurship, Wealth Inequality, and Taxation},
author = {Meh, C{\'e}saire A.},
year = {2005},
journal = {Review of Economic Dynamics},
volume = {8},
number = {3},
pages = {688--719},
publisher = {{Elsevier}},
doi = {10.1016/J.RED.2005.03.001},
url = {https://doi.org/10.1016/j.red.2005.03.001},
abstract = {This paper investigates the importance of entrepreneurship when quantifying the aggregate and distributional effects of switching from a progressive to a proportional income tax system. I find that the distributional consequences of the tax reform in a model economy with entrepreneurs contrast markedly from those in a model economy with no entrepreneurs. The elimination of progressive taxation has a negligible effect on wealth inequality when entrepreneurship is considered but has a large effect when entrepreneurship is omitted. The framework used is an occupational choice model, in which the decision to become an entrepreneur is determined by the ability to manage a firm and by asset holdings. The calibrated economy can account for the high savings rate of entrepreneurs relative to non-entrepreneurs, and the high concentration of wealth observed in the data.},
keywords = {Determinants of Wealth and Wealth Inequality,Impacts of Wealth Inequality,Wealth Taxation}
}
Downloads: 2
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