Does Mandating Social Insurance Affect Entrepreneurial Activity?

Youssef Benzarti, Jarkko Harju and Tuomas Matikka

No 119, Working Papers from VATT Institute for Economic Research

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%, which they channel instead into their firms. While young firms use the saved cash to increase their sales by 11% and labor costs by 6%, 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.

Keywords: social insurance; entrepreneurs; economic activity; eläkevakuutusmaksut; yrittäjät; yritysten kehitys; Social security; taxation and inequality; Sosiaaliturva; verotus ja tulonjako; H25; H32; H55; Elinkeinopolitiikka; Sosiaaliturva (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-ent and nep-ias
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Citations: View citations in EconPapers (2)

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https://www.doria.fi/handle/10024/169513

Related works:
Journal Article: Does Mandating Social Insurance Affect Entrepreneurial Activity? (2020)
Working Paper: Does Mandating Social Insurance Affect Entrepreneurial Activity? (2019)
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