Fiscal transfers, local government, and entrepreneurship

Piotr Danisewicz and Steven Ongena
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Piotr Danisewicz: University of Bristol

No 20-89, Swiss Finance Institute Research Paper Series from Swiss Finance Institute

Abstract: Can local government spending spur entrepreneurial activity? To answer this question we study Poland where municipalities with lower tax revenues receive direct monetary grants from the national budget that vary at multiple pre-determined and non-manipulable thresholds. Employing a fuzzy regression discontinuity design, we find a positive impact of fiscal transfers on the number of firms, especially sole proprietorships and small firms. The impact is stronger in municipalities where the opposition is more involved in the legislative process or more parties are represented in the municipal council, and in regions where historical legacies shaped a more positive attitude towards entrepreneurship.

Keywords: Fiscal transfers; Local government spending; Entrepreneurship; “Fuzzy” Regression Discontinuity Design. (search for similar items in EconPapers)
JEL-codes: E62 H71 H72 L26 P16 (search for similar items in EconPapers)
Pages: 48 pages
Date: 2020-10
New Economics Papers: this item is included in nep-mac
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Fiscal transfers, local government, and entrepreneurship (2024)
Working Paper: Fiscal transfers, local government, and entrepreneurship (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:chf:rpseri:rp2089

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