Publication
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
Abstract
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%.