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Collateral Value and Entrepreneurship: Evidence from a Property Tax Reform

Miguel Ferreira (), João Pereira Dos Santos () and Ana Venâncio ()

No 137, GEE Papers from Gabinete de Estratégia e Estudos, Ministério da Economia

Abstract: We study the role of property taxes on entrepreneurial activity using a quasi-natural experiment, which unexpectedly reduced the upper bound of the Portuguese property tax rate for urban properties in 2008. Using a difference-in-differences approach, we find that treated municipalities (i.e., municipalities that had a property tax rate above the new upper bound) experienced higher entry rates in the manufacturing sector vis-à-vis control municipalities (i.e., municipalities that had a property tax rate at or below the new upper bound). Taking advantage of firm-level data, we show that start-ups created as a response to the decrease in property taxes in treated municipalities use more debt, invest more, and are more likely to survive.

Keywords: Entrepreneurship; Property taxes; Savings; Portugal (search for similar items in EconPapers)
Pages: 38 pages
Date: 2019-12, Revised 2019-12
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Citations: View citations in EconPapers (1)

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https://www.gee.gov.pt//RePEc/WorkingPapers/GEE_PAPERS_137.pdf First version, 2019 (application/pdf)

Related works:
Working Paper: Collateral value and entrepreneurship: Evidence from a property tax reform (2022) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:mde:wpaper:0137

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