Abstract: This paper exploits a natural experiment and uses econometric methods to discuss the effect of estate duty on employment decision of family firms. The experiment is made possible by the Hong Kong SAR Government’s decision to abolish its estate duty in 2006. We find that the impact of estate duty on family firms’ employment is positive and minimal in most cases. The employment demand of family firms mainly depends on the production scale, industrial type, and so on. Only at the time of family firm succession, the estate duty will have an adverse effect on the entrepreneur’s employment demand to a certain degree. Therefore, the author believes that the point that the estate duty would harm the investment, employment, capital accumulation and development of civilian-run economy needs further discussion. According to the conclusion，this paper points out that the estate duty must be considered objectively and rationally especially with the background of Rebuilding Local Tax System and deepening reform of income distribution system.
Keywords: Estate Duty，Family Firm，Employment Decision，Empirical Study
source:Finance & Trade Economics ,No.3,2013