Kinship taxation as an impediment to growth experimental evidence from Kenyan microenterprises Munir Squires
By: Squires, Munir
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Material type: 
ArticleSubject(s): PAISES EN DESARROLLO | KENIA | IMPUESTOS | ECONOMIA OCULTA | ANALISIS MICROECONOMICO
In:
The Economic Journal v. 134, n. 662, August 2024, p. 2558-2579.Summary: This paper documents strong pressure to share income faced by entrepreneurs in a developing country setting. This ‘kinship tax’ can distort productive decisions, including investment. A lab experiment with 361 Kenyan entrepreneurs reveals that a third of them face distortionary pressure to share income. This kinship tax is higher for men, and increasing in entrepreneurial ability. Using a pre-existing randomised cash transfer experiment, I find that only male entrepreneurs who do not face distortionary kinship taxation invest these transfers. Imposing some parametric assumptions, I estimate that kinship taxation decreases aggregate productivity among firms in this sample by one-quarter.
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| OP 282/2024/662-1 Trust and state effectiveness | OP 282/2024/662-2 Political language in economics | OP 282/2024/662-3 Accommodating the rise in urbanisation | OP 282/2024/662-4 Kinship taxation as an impediment to growth | OP 282/2024/662-5 Spending and pricing to deter arbitrage | OP 282/2024/663 The Economic Journal | OP 282/2024/663-1 Price-cost margins, fixed costs and excess profits |
Bibliografía
This paper documents strong pressure to share income faced by entrepreneurs in a developing country setting. This ‘kinship tax’ can distort productive decisions, including investment. A lab experiment with 361 Kenyan entrepreneurs reveals that a third of them face distortionary pressure to share income. This kinship tax is higher for men, and increasing in entrepreneurial ability. Using a pre-existing randomised cash transfer experiment, I find that only male entrepreneurs who do not face distortionary kinship taxation invest these transfers. Imposing some parametric assumptions, I estimate that kinship taxation decreases aggregate productivity among firms in this sample by one-quarter.
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