Entrepreneurial Culture, Occupational Choice and Tax Policy
DEVELOPMENT CHALLENGES: SOME CONTEMPORARY ISSUES, Joyashree Roy, Ajitava Raychaudhuri, eds., pp. 1-20, New Delhi: Allied Publishers, 2005
26 Pages Posted: 16 Jan 2008
This paper studies the influence of entrepreneurial culture among social groups in an economy. The cultural factor determines their occupational preferences. We develop a model in which a concentration factor has been used as a measure of business culture determining the occupational choice patterns of otherwise identical social groups. The occupational distribution of individuals from different groups is obtained by comparing expected utilities from employment and entrepreneurship. Based on the labor market outcomes the mean income and income variance of different groups is calculated. Individuals from groups with greater cultural traits display higher relative risk aversion with a high income variance compared to other groups. We propose a tax- subsidy policy and obtain conditions for maximizing social utility.
Keywords: Entrepreneurial culture, Self-employment, Risk aversion, Income variance, National Income, Tax-subsidy Policy
JEL Classification: D81, J23, H24
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