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Solving the Problems of Economic Development Incentives

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  • TIMOTHY J. BARTIK

Abstract

This paper reviews the research literature relevant to economic development incentives provided by state and local governments, and recommends reforms in these incentives. I argue that the main problem with current incentive policies is that state and local governments often provide incentives that are not in the best interest of that state or local area, for example that are excessively costly per job created, or that provide jobs that do not improve the job opportunities of local residents. I suggest that reforms should be "bottom-up" rather than "top-down." Regulation of incentives by the federal government may prevent both desirable and undesirable incentives. "Bottom-up" reforms would include more information on incentive offers, a budget constraint on the volume of incentives, stronger standards for job quality and job accessibility for the local unemployed, and better benefit-cost analyses of incentives. Copyright 2005 Blackwell Publishing Ltd..

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Bibliographic Info

Article provided by Gatton College of Business and Economics, University of Kentucky in its journal Growth and Change.

Volume (Year): 36 (2005)
Issue (Month): 2 ()
Pages: 139-166

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Handle: RePEc:bla:growch:v:36:y:2005:i:2:p:139-166

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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0017-4815

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Cited by:
  1. Antonio Accetturo & Guido de Blasio, 2011. "Policies for local development: an evaluation of Italy's "Patti Territoriali"," Temi di discussione (Economic working papers), Bank of Italy, Economic Research and International Relations Area 789, Bank of Italy, Economic Research and International Relations Area.
  2. Jeffrey Thompson, 2010. "Prioritizing Approaches to Economic Development in New England: Skills, Infrastructure, and Tax Incentives," Published Studies, Political Economy Research Institute, University of Massachusetts at Amherst priorities_september7_per, Political Economy Research Institute, University of Massachusetts at Amherst.
  3. Timothy J. Bartik & George A. Erickcek, 2012. "Simulating the Effects of Michigan's MEGA Tax Credit Program on Job Creation and Fiscal Benefits," Upjohn Working Papers and Journal Articles 12-185, W.E. Upjohn Institute for Employment Research.
  4. Paul Rothstein & Nathan Wineinger, 2007. "Transferable tax credits in Missouri: an analytical review," Regional Economic Development, Federal Reserve Bank of St. Louis, Federal Reserve Bank of St. Louis, issue Nov, pages 53-74.
  5. Kaitlyn Harger & Amanda Ross, 2014. "Do Capital Tax Incentives Attract New Businesses? Evidence across Industries from the New Markets Tax Credit," Working Papers 14-14, Department of Economics, West Virginia University.
  6. Bukenya, James O., 2009. "Employment Growth in the Rural South: Do Sectors Matter?," 2009 Annual Meeting, January 31-February 3, 2009, Atlanta, Georgia, Southern Agricultural Economics Association 45903, Southern Agricultural Economics Association.
  7. Tyler Cowen, 2007. "When should regions bid for artistic resources?," The Review of Austrian Economics, Springer, Springer, vol. 20(1), pages 1-10, March.

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