Kinship Taxation in the Lab and in the Field: Constraint on Microenterprise Growth?

Research Note
Published on 20 October 2016


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.