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On the Effects of Redistribution on Growth and Entrepreneurial Risk–Taking

  • This paper investigates the redistributive effects of taxation on occupational choice and growth. We discuss a twoñsector economy in the spirit of Romer (1990). Agents engage in one of two alternative occupations: either selfñemployment in an intermediate goods sector characterized by monopolistic competition, or employment as an ordinary worker in this sector. Entrepreneurial pro_ts are stochastic. The occupational choice under risk endogenizes the number of _rms in the intermediate goods industry. While the presence of entrepreneurial risk results in a suboptimally low number of _rms and depresses growth, nonñlinear tax schemes are partly capable of compensating the negative by effects by ex post providing a social insurance.

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Author:Christiane Clemens, Maik Heinemann
URL: https://pub-data.leuphana.de/frontdoor/index/index/docId/359
Series (Serial Number):University of Lüneburg Working paper series in economics (6)
Document Type:ResearchPaper
Year of Completion:2005
Date of Publication (online):2005/07/06
Release Date:2005/07/06
Tag:OLG; endogenous growth; entrepreneurship; occupational choice; redistributive taxation
GND Keyword:Wachstumstheorie / Endogenes Wirtschaftswachstum; Oberlandesgericht; Steuer; Unternehmer
Institutes:Universität / Frühere Fachbereiche
Dewey Decimal Classification:3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft