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Corporate taxes and high-quality entrepreneurship: evidence from a tax reform

Ana Venâncio (), Victor Barros and Clara Raposo

No 140, GEE Papers from Gabinete de Estratégia e Estudos, Ministério da Economia

Abstract: We examine the impact of corporate taxation on entrepreneurship, using a quasi-natural experiment, which substantially reduced the corporate tax rate for start-ups located in inland municipalities in Portugal. The combination of a high quality and universal firm level database for Portugal allows the detailed study of firm's behaviour. We use BPlim’s harmonized Central Balance Sheet panel for the period of 2006 to 2015 to evaluate the different behaviour of exporters and non-exporters in Portugal. We follow on the self-selection and learning-by-exporting literature, estimating several exporter productivity premiums. After finding solid evidence of a productivity advantage of exporters compared to non-exporters, which seems to emerge several years before firms start to export, we expand our study in order to explore the causality of the previous findings. Thus, we estimate a logit fixed effects model to assess the impact of several variables in the export propensity of a firm. We corroborate the self-selection theory, given the significance of labour productivity in probability of a firm exporting, as well, as significant effects of firm absolute size, relative market share, sector concentration and investment.

Keywords: Firm entry; Job creation; Tax policy; Corporate taxes; High-quality entrepreneurship (search for similar items in EconPapers)
JEL-codes: H24 H25 H26 J24 L26 M13 (search for similar items in EconPapers)
Pages: 50 pages
Date: 2020-01, Revised 2020-01
New Economics Papers: this item is included in nep-acc, nep-ent, nep-eur, nep-pbe, nep-pub and nep-sbm
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https://www.gee.gov.pt//RePEc/WorkingPapers/GEE_PAPERS_140.pdf First version, 2020 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:mde:wpaper:0140

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