Developing country entrepreneurs often face family pressure to share income. This pressure, a “kinship tax”, can discourage the most able entrepreneurs from expanding their firms. This project uses evidence from a lab experiment in Kenya to estimate marginal kinship tax rates for individual entrepreneurs, and then estimates how these distortions reduce aggregate output by causing inputs to be misallocated across firms.
This research was funded under the Private Enterprise Development in Low-Income Countries (PEDL) Programme
Squires, M. Kinship Taxation in the Lab and in the Field: Constraint on Microenterprise Growth? (2016)