Publications in Peer-Reviewed Journals
Income Taxation, Entrepreneurship, and Incorporation Status of Self-Employment
PDF | International Tax and Public Finance
Abstract: This paper splits self-employment, which has mostly been used as a proxy for entrepreneurship, into two different entrepreneur types with incorporated and unincorporated businesses. I examine how these two types differ in sensitivity to individual-specific marginal and average personal income tax rates in the US. I analyze the probability of becoming an incorporated or unincorporated self-employed worker by utilizing IV models. I use the Annual Social and Economic (ASEC) rotating panel data of the Current Population Survey (CPS) from 2005 to 2019 to track a paid employee's decision to become self-employed. My empirical findings show that reducing personal income tax rates increase overall self-employment activity. Higher personal income tax rates encourage incorporated entrepreneurship but discourage unincorporated entrepreneurship. These results imply that future research and tax policy should take into account that different types of entrepreneurs respond differently to tax incentives.
The Income Elasticity of Gross Sports Betting Revenues in Nevada: Short-Run and Long-Run Estimates
With Mark W. Nichols
PDF | Journal of Sports Economics
Abstract: In May 2018, the Supreme Court overturned the Professional and Amateur Sports Protection Act, thereby allowing all states to offer sports betting. Prior to this, Nevada was the only state with unrestricted sports betting. Using sports betting data from Nevada, we estimate long-run and short-run income elasticities to determine the growth and volatility of sports betting as a tax base. Sports gambling grows at a similar rate as state income and is stable and insensitive to short-run shocks to income. However, the amount of money kept by casinos, and hence the state, is small compared to other traditional tax bases.
Entrepreneurship and Regional Growth Regimes in the United States
With John Appert and Frank M. Fossen
PDF | Przeglad Organizacji - Organization Review
Abstract: We investigate regional growth regimes in the US states from 1980 to 2014. Based on start-up rates and employment growth as suggested by Audretsch and Fritsch (2002), we classify states into routinized, entrepreneurial, revolving door, and downsizing regimes. The results indicate that there was no significant association between start-up rates and employment growth in the 1980s, but a positive relationship in the 1990s, 2000s, and 2010s. Further, we document that the entrepreneurial and the downsizing regimes are attractor regimes that tend to stick, whereas the routinized and revolving door regimes are transitionary regimes. Importantly, states in the routinized regime predominantly move to the downsizing regime, suggesting that an over-reliance on established companies relative to start-ups in the state may threaten employment growth in the long run
The Enforceability of Non-Compete Agreements and Different Types of Entrepreneurship: Evidence from Utah and Massachusetts
With Frank M. Fossen
PDF | Journal of Entrepreneurship and Public Policy
Abstract: The economic effects of non-compete agreements (NCAs) have received increasing attention from academics and policymakers. This paper investigates how NCA policies affect different types of entrepreneurship with incorporated and unincorporated businesses. We exploit policy changes as quasi-experiments in Utah in 2016 and in Massachusetts in 2018. Both states decreased the enforceability of NCAs by limiting the duration of the NCAs to one year, and in addition, Massachusetts banned non-compete agreements for low-wage workers. We estimate the effects of the reforms on the probabilities of being either type of entrepreneur using Synthetic Control Methods and difference-in-differences regressions based on the American Community Survey (ACS) data. Our findings show that the decrease in the enforceability of NCAs in Massachusetts resulted in a higher rate of unincorporated entrepreneurship among low-wage workers, while there was no sizable effect on the rate of incorporated entrepreneurship. For Utah, our results indicate that the reform increased both types of entrepreneurship. The findings imply that states can promote entrepreneurial activity by reducing the enforceability of NCAs. The way of changing the enforceability of NCAs matters, as different provisions encourage different types of entrepreneurship in a given state.
Working Papers
The Effects of Income Taxation on the Intensive Margin of Labor Supply in Different Types of Self-Employment
With Frank M. Fossen
Paper Presentation: Southern Economic Association, 92nd Annual Meeting, November 19-21, 2022, Fort Lauderdale, FL
Abstract: We estimate the change in the number of hours worked among self-employed workers due to changes in individual-specific marginal personal income tax rates in the United States. We estimate IV regressions, which exploit changes in the tax code, based on rotating panel data from the Annual Social and Economic Supplement (ASEC) of the Current Population Survey (CPS) from 2000 to 2020. We distinguish between self-employed owners of incorporated and unincorporated businesses and examine their differential responses to income taxation. Our findings show that an increase in the individual-specific marginal personal income tax rate increases the hours worked among the self-employed with unincorporated businesses. This could be explained by income effects or higher rewards from tax avoidance through self-employment. We do not find a significant response to the personal income tax rate among the self-employed with incorporated businesses.
The Effects of Onsite and Online Sports Betting on Lottery and Casino Gambling
With Mark W. Nichols
Paper Presentation: Southern Economic Association, 92nd Annual Meeting, November 19-21, 2022, Fort Lauderdale, FL
Abstract: In May 2018, the Supreme Court overturned the Professional and Amateur Sports Protection Act, allowing every US state to legalize and offer sports betting. Since then, thirty-four states have legalized sports betting as of May 2022. However, the literature examining the effects of legalized sports betting on other forms of gambling is limited. This study contributes to the literature in three ways. First, we provide evidence on the effects of sports betting on different types of casino gambling for nine states, Delaware, Illinois, Iowa, Mississippi, Nevada, New Jersey, Pennsylvania, Rhode Island, and West Virginia. Second, we examine the effects of sports betting on lottery revenues for three states, Illinois, Pennsylvania, and Rhode Island. Third, given the growing popularity of online sports betting, we analyze the impact of online versus onsite sports betting revenues for seven states, Illinois, Iowa, Pennsylvania, Rhode Island, Nevada, New Jersey, and West Virginia.
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