Collateral value and entrepreneurship: Evidence from a property tax reform

• Autor(a) principal: Ferreira, Miguel
• Data de Publicação: 2019
• Outros Autores: Pereira dos Santos, João, Venâncio, Ana
• Tipo de documento: Artigo
• Idioma: eng
• Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
• Texto Completo: http://hdl.handle.net/10362/143355
• topic: Entrepreneurship; Property taxes; Savings; Portugal

We study the role of property taxes on entrepreneurial activity using a quasi-natural experiment, which unexpectedly reduced the upper bound of the Portuguese property tax rate for urban properties in 2008. Using a diffrence-in-differences approach, we nd that treated municipalities (i.e., municipalities that had a property tax rate above the new upper bound) experienced higher entry rates in the manufacturing sector vis-a-vis control municipalities (i.e., municipalities that had a property tax rate at or below the new upper bound). Taking advantage of rm-level data, we show that start-ups created as a response to the decrease in property taxes in treated municipalities use more debt, invest more, and are more likely to survive.