Tax Policy and Firm Entry and Exit Dynamics: Evidence from OECD Countries

Richard Kneller and Danny McGowan

Discussion Papers from University of Nottingham, School of Economics

Abstract: In this paper we study the effects of reforms to corporate and personal income taxation on the rate of firm entry and exit using industry data for 19 OECD countries from 1998 to 2005. Using a difference-in-differences approach to correct for endogeneity bias we find that increases in corporate taxation affect entry but not exit. The effects of personal taxation depend upon the marginal tax rate that is altered. Increases in marginal tax rates applied at low income levels negatively affect entry and positively affect exit, whereas marginal tax reforms at higher income levels have the opposite effect.

Keywords: income taxation; firm entry; firm exit; difference in differences JEL codes: D22, H2, H32, L26 (search for similar items in EconPapers)
Date: 2012-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

Downloads: (external link)
https://www.nottingham.ac.uk/economics/documents/discussion-papers/dp12-01.pdf (application/pdf)

Related works:
Working Paper: Tax Policy and Firm Entry and Exit Dynamics: Evidence from OECD Countries (2012)
Working Paper: Tax Policy and Firm Entry and Exit Dynamics: Evidence from OECD Countries (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:not:notecp:12/01

Access Statistics for this paper

More papers in Discussion Papers from University of Nottingham, School of Economics School of Economics University of Nottingham University Park Nottingham NG7 2RD. Contact information at EDIRC.
Bibliographic data for series maintained by ().