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Local Fiscal Policy and Establishment Growth

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  • Gabe, Todd M.

Abstract

This applied study examines the effects of local taxes and government spending on the employment growth of 17,172 Maine establishments that were in operation in 1996 and 1999. Empirical results indicate that taxes have a negative effect on an establishment’s three-year employment growth rate, although the tax effects are quite small in magnitude. These results are robust to the omission of establishments located in municipalities that cause group effects in the regression analysis. The negative tax effects are not statistically significant, however, in regressions that correct for sample selection bias related to establishment closures. In general, the empirical findings do not reveal a significant relationship between establishment growth and several types of local government spending.

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Bibliographic Info

Article provided by Mid-Continent Regional Science Association in its journal Journal of Regional Analysis and Policy.

Volume (Year): 33 (2003)
Issue (Month): 1 ()
Pages:

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Handle: RePEc:ags:jrapmc:132246

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Keywords: Financial Economics;

References

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  9. Evans, Paul & Karras, Georgios, 1994. "Are Government Activities Productive? Evidence from a Panel of U.S. States," The Review of Economics and Statistics, MIT Press, vol. 76(1), pages 1-11, February.
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  12. Ronald C. Fisher, 1997. "Effects of state and local public services on economic development," New England Economic Review, Federal Reserve Bank of Boston, issue Mar, pages 53-82.
  13. Bartik, Timothy J, 1985. "Business Location Decisions in the United States: Estimates of the Effects of Unionization, Taxes, and Other Characteristics of States," Journal of Business & Economic Statistics, American Statistical Association, vol. 3(1), pages 14-22, January.
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Cited by:
  1. A. Lasagni & A. Nifo & G. Vecchione, 2012. "Firm productivity and institutional quality. Evidence from Italian industry," Economics Department Working Papers 2012-EP07, Department of Economics, Parma University (Italy).
  2. Rork, Jonathan C., 2005. "Getting What You Pay For: The Case of Southern Economic Development," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 35(2).
  3. Kneller, Richard & Misch, Florian, 2013. "The effects of public spending composition on firm productivity," ZEW Discussion Papers 13-014, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.

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