Golden Handcuffs or Silver Spurs? The Implications of Inheritance Taxes for Entrepreneurship

Yang Zhang, Ziang Qiu, Donghyun Park and Shu Tian
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Yang Zhang: University of Macau
Ziang Qiu: University of Macau
Donghyun Park: Asian Development Bank
Shu Tian: a

No 805, ADB Economics Working Paper Series from Asian Development Bank

Abstract: The intricate relationship between wealth redistribution policies and entrepreneurial vitality has long captivated the attention of economists and policymakers. Drawing on data from the Global Entrepreneurship Monitor (GEM) and manually collected information on inheritance taxation policy reforms across a diverse panel of 55 countries from 2000 to 2023, this study uses a staggered difference-in-differences model to examine how the changing rules for wealth transfer taxation influence entrepreneurial activity. Our results show that higher inheritance tax rates are associated with elevated entrepreneurial index scores and that rising inheritance taxes correlate with increases in the entrepreneurial index, while tax cuts correspond to declines. This finding is robust to alternative measures of key constructs and identification strategies. Our results offer valuable insights into how inheritance tax policies influence entrepreneurial behavior, providing essential guidance for policymakers and economists aiming to comprehend the intricate dynamics of wealth transfer and entrepreneurship on a global scale.

Keywords: inheritance tax; entrepreneurship; cross-country; difference-in-differences (search for similar items in EconPapers)
JEL-codes: H24 L26 (search for similar items in EconPapers)
Pages: 45
Date: 2025-09-23
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Persistent link: https://EconPapers.repec.org/RePEc:ris:adbewp:021559

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