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Place-based tax exemptions and displacement effects: An evaluation of the Zones Franches Urbaines program

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  • Givord, Pauline
  • Rathelot, Roland
  • Sillard, Patrick

Abstract

In this study, we evaluate the impact of the French Zones Franches Urbaines on economic activity. This public-funded place-based program, comparable to US enterprise zones, exempts businesses from taxes for a period of at least five years. For the purpose of this evaluation, we merged several administrative datasets at the company level. This allows us to exhaustively observe business creations and stocks, as well as employment and financial outcomes for companies at specific geographical locations. We focus on the second round of the program, during which treated territories were selected among a pool of deprived areas according to a known set of covariates. The way treatment was assigned makes the conditional independence assumption credible in our case. Overall, we find significant effects on both business creation and employment while the impact on companies that were located in the treated areas before the program is not significant, regardless of the outcome. We also provide evidence of significant negative spillovers of the program on neighboring areas.

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Bibliographic Info

Article provided by Elsevier in its journal Regional Science and Urban Economics.

Volume (Year): 43 (2013)
Issue (Month): 1 ()
Pages: 151-163

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Handle: RePEc:eee:regeco:v:43:y:2013:i:1:p:151-163

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Related research

Keywords: Enterprise zone; Local employment; Place-based policies; Propensity score matching; Externalities;

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Citations

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Cited by:
  1. Anthony Briant & Miren Lafourcade & Benoît Schmutz, 2012. "Can Tax Breaks Beat Geography? Lessons from the French Enterprise Zone Experience," PSE Working Papers halshs-00695225, HAL.
  2. Thierry MAYER & Florian MAYNERIS & Loriane PY, 2012. "The Impact of Urban Enterprise Zones on Establishments' Location Decisions: Evidence from French ZFUs," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2012019, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  3. Ooi, Joseph T.L. & Le, Thao T.T., 2013. "The spillover effects of infill developments on local housing prices," Regional Science and Urban Economics, Elsevier, Elsevier, vol. 43(6), pages 850-861.
  4. Behaghel, Luc & Lorenceau, Adrien & Quantin, Simon, 2013. "Replacing Churches and Mason Lodges? Tax Exemptions and Rural Development," IZA Discussion Papers 7808, Institute for the Study of Labor (IZA).
  5. Corentin Trevien & Pauline Givord & Simon Quantin, 2012. "A Long-Term Evaluation of the First Generation of the French Urban Enterprise Zones," ERSA conference papers ersa12p776, European Regional Science Association.
  6. Mayneris, F. & Py, L., 2014. "The efficiency of enterprise zone programs: some conflicting results?," Working papers, Banque de France 474, Banque de France.
  7. David Neumark & Helen Simpson, 2014. "Place-Based Policies," NBER Working Papers 20049, National Bureau of Economic Research, Inc.
  8. Cahuc, Pierre & Carcillo, Stéphane & Le Barbanchon, Thomas, 2014. "Do Hiring Credits Work in Recessions? Evidence from France," IZA Discussion Papers 8330, Institute for the Study of Labor (IZA).
  9. repec:hal:wpaper:halshs-00695225 is not listed on IDEAS
  10. Tong, Patricia & Zhou, Li, 2014. "The Impact of Place-Based Employment Tax Credits on Local Labor: Evidence from Tax Data," Working Papers 2014-6, University of Alberta, Department of Economics.

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