Entrepreneurship disparities within Switzerland - Do tax and language differences play a role?

Because of its unique political institutions and its good economic track record Switzerland used to be called a special case. This paper investigates start-up propensities in this country based on the individual data of the adult population survey of the Global Entrepreneurship Monitor. The focus is on factors that are distinctive for Switzerland: language differences and differences in taxes on corporate profit and personal income. There are substantial entrepre-neurship disparities among the language areas of Switzerland. Still, I do not find evidence for a cultural influence. The different start-up propensities in the three language areas can be ex-plained by structural characteristics of the regional economy. The same applies to differences in income and profit taxes. If other regional factors are taken into account I do not find evi-dence for a direct influence of taxes on the entrepreneurial propensity of the inhabitants of Swiss regions. There is however some evidence for indirect effects. This paper adds to our understanding of the effects of culture and tax differences on entrepreneurship