Due to a tax law implemented in 1998, Dutch employers can claim an extra tax deduction when they train employees aged 40 years or older. This causes a discontinuity in a firm's cost of training an employee. We exploit this discontinuity to identify two effects: the effect of the tax deduction on...

This paper shows that industry choices of entrepreneurs are determined by their social networks. The separation of residential and business addresses helps us establish the causality, because we can safely argue that residential addresses determine social networks but do not directly affect...