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Impact of Urban Free Zones (Zones Franches Urbaines: ZFUs on Paid Employment and Business Creation)

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Author Info

  • Roland Rathelot

    (INSEE)

  • Patrick Sillard

    (INSEE)

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    Abstract

    France set up 41 Zones Franches Urbaines (ZFUs) on January, 1st, 2004 to replace a less generous program named Zones de Redynamisation Urbaine (ZRUs). Businesses located in ZFUs enjoy a five-year exemption from employers' social contributions, corporate income tax, local business tax, and property tax. To assess the impact on employment and business creation, we compare ZFUs with a control group of ZRUs that did not change status. We find a positive impact of the shift to ZFU status on business and job creation. Two-thirds of the increase in gross flows of local business units is due to an influx of economic activities from areas not targeted by the measures (i.e., these are transfers, not outright business creation). The cost per job created or transferred to ZFUs seems high, but we lack evaluations of policies aimed at similar objectives with which we could compare the ZFU system.

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    File URL: http://www.insee.fr/fr/ffc/docs_ffc/ES415-416e.pdf
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    Bibliographic Info

    Article provided by Institut National de la Statistique et des Etudes Economiques in its journal Economie et Statistique.

    Volume (Year): 415-416 (2009)
    Issue (Month): (March)
    Pages: 81-96.

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    Handle: RePEc:crs:ecosta:es415-416e

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    Related research

    Keywords: Tax Exemption; Business Creation; Urban Policy; Matching; Evaluation;

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