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Does Mandating Social Insurance Affect Entrepreneurial Activity?

Youssef Benzarti (), Jarkko Harju () and Tuomas Matikka ()

American Economic Review: Insights, 2020, vol. 2, issue 2, 255-68

Abstract: This paper estimates the effect of relaxing the social insurance mandate on entrepreneurial activity using rich administrative data from Finland. We find that relaxing the social insurance mandate leads entrepreneurs to reduce their contributions by 16 percent, which they channel instead into their firms. While young firms use the saved cash to increase their sales by 11 percent and labor costs by 6 percent, older firms use it to improve their net lending position by purchasing stocks. Our results imply that the impact of the social insurance mandate on business activity is heterogeneous and depends on the age of the firm.

JEL-codes: H55 J32 L26 (search for similar items in EconPapers)
Date: 2020
Note: DOI: 10.1257/aeri.20190097
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Working Paper: Does Mandating Social Insurance Affect Entrepreneurial Activity? (2019) Downloads
Working Paper: Does Mandating Social Insurance Affect Entrepreneurial Activity? (2019) Downloads
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