The Korean Journal of Economic Studies
The Macroeconomic Effects of Cuts of Family Business Inheritance Tax: Focusing on Medium and Large-sized Enterprises
Jung Joo La (Pi-Touch Institute)Year 2017Vol. 65No. 3
This study analyzes the macroeconomic effects of cuts of family business inheritance tax through endogenous managerial ability focusing on medium and large-sized enterprises. Managerial ability of a descendant is a combination of inherited talents from parents and improved ability through human capital investments. Previous studies, however, depend only on the former. The endogenous approach of managerial ability avoids underestimating the positive impacts of the inheritance tax cuts. According to the empirical analysis based on Korea’s data, capital, labor, production, physical investment, and wage increase by 7.25%, 3.67%, 8.46%, 7.25%, and 4.61%, respectively, as the inheritance tax rates decrease from 50% to 0%.