IDEAS home Printed from https://ideas.repec.org/a/sae/ecdequ/v31y2017i4p312-325.html
   My bibliography  Save this article

Tax Increment Financing: A Propensity Score Approach

Author

Listed:
  • Anita Yadavalli
  • Jim Landers

Abstract

This study examines the effect of tax increment financing (TIF) on economic growth in Indiana. TIF areas are designated with the intent of spurring economic development characterized primarily by growth in assessed value and in employment within the TIF area. We examined property-level data from 2004 to 2013 and found that the average property in a TIF area may display higher assessed values than the average property in a similarly situated non-TIF area. While both TIF and non-TIF properties tended to grow over time, the average property in a TIF area may grow by slightly more than its non-TIF counterpart. We also found that TIF does not statistically significantly affect employment or employment growth over time. While there does not appear to be a multiplicative effect of the presence of enterprise zones and TIF on employment, TIF works with property tax abatements in incentivizing job creation. Our analysis of the effect of TIF on economic development outcomes informs policy makers of the likelihood that a given area will adopt TIF in the context of the “but-for†question.

Suggested Citation

  • Anita Yadavalli & Jim Landers, 2017. "Tax Increment Financing: A Propensity Score Approach," Economic Development Quarterly, , vol. 31(4), pages 312-325, November.
    • Handle: RePEc:sae:ecdequ:v:31:y:2017:i:4:p:312-325
    DOI: 10.1177/0891242417733801
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/0891242417733801
    Download Restriction: no
    File URL: https://libkey.io/10.1177/0891242417733801?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Sylvie Charlot & Sonia Paty, 2010. "Do Agglomeration Forces Strengthen Tax Interactions?," Urban Studies, Urban Studies Journal Limited, vol. 47(5), pages 1099-1116, May.
    2. Joel A. Elvery, 2009. "The Impact of Enterprise Zones on Resident Employment," Economic Development Quarterly, , vol. 23(1), pages 44-59, February.
    3. Anderson, John E., 1990. "Tax Increment Financing: Municipal Adoption and Growth," National Tax Journal, National Tax Association, vol. 43(2), pages 155-63, June.
    4. Gebremariam, Gebremeskel H. & Gebremedhin, Tesfa G., 2006. "County-Level Determinants of Local Public Services in Appalachia: A Multivariate Spatial Autoregressive Model Approach," 2006 Annual meeting, July 23-26, Long Beach, CA 21375, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    5. Daniel P. McMillen, 2004. "Employment Densities, Spatial Autocorrelation, and Subcenters in Large Metropolitan Areas," Journal of Regional Science, Wiley Blackwell, vol. 44(2), pages 225-244, May.
    6. Brian E. Whitacre & David Shideler & Randi Williams, 2016. "Do Incentive Programs Cause Growth? The Case of the Oklahoma Quality Jobs Program and Community-Level Economic Growth," Economic Development Quarterly, , vol. 30(1), pages 62-74, February.
    7. Felix, R. Alison & Hines, James R., 2013. "Who offers tax-based business development incentives?," Journal of Urban Economics, Elsevier, vol. 75(C), pages 80-91.
    8. Björn Kauder, 2015. "Spatial Administrative Structure And Intrametropolitan Tax Competition," Journal of Regional Science, Wiley Blackwell, vol. 55(4), pages 626-643, September.
    9. Gebremeskel Gebremariam & Tesfa Gebremedhin & Peter Schaeffer, 2012. "County-level determinants of local public services in Appalachia: a multivariate spatial autoregressive model approach," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 49(1), pages 175-190, August.
    10. Laura A. Reese, 2006. "Not Just Another Determinants Piece: Path Dependency and Local Tax Abatements," Review of Policy Research, Policy Studies Organization, vol. 23(2), pages 491-504, March.
    11. Dye, Richard F. & Merriman, David F., 2000. "The Effects of Tax Increment Financing on Economic Development," Journal of Urban Economics, Elsevier, vol. 47(2), pages 306-328, March.
    12. Byrne, Paul F., 2005. "Strategic interaction and the adoption of tax increment financing," Regional Science and Urban Economics, Elsevier, vol. 35(3), pages 279-303, May.
    13. Stansel, Dean, 2005. "Local decentralization and local economic growth: A cross-sectional examination of US metropolitan areas," Journal of Urban Economics, Elsevier, vol. 57(1), pages 55-72, January.
    14. Bondonio, Daniele & Greenbaum, Robert T., 2007. "Do local tax incentives affect economic growth? What mean impacts miss in the analysis of enterprise zone policies," Regional Science and Urban Economics, Elsevier, vol. 37(1), pages 121-136, January.
    15. Euijune Kim & Geoffrey Hewings & Kyung-Min Nam, 2014. "Optimal Urban Population Size: National vs Local Economic Efficiency," Urban Studies, Urban Studies Journal Limited, vol. 51(2), pages 428-445, February.
    16. Gibson, Diane, 2003. "Neighborhood characteristics and the targeting of tax increment financing in Chicago," Journal of Urban Economics, Elsevier, vol. 54(2), pages 309-327, September.
    17. Anderson, John E., 1990. "Tax Increment Financing: Municipal Adoption and Growth," National Tax Journal, National Tax Association;National Tax Journal, vol. 43(2), pages 155-163, June.
    18. Brent C. Smith, 2009. "If You Promise to Build It, Will They Come? The Interaction between Local Economic Development Policy and the Real Estate Market: Evidence from Tax Increment Finance Districts," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 37(2), pages 209-234, June.
    19. Robert T. Greenbaum & Jim Landers, 2014. "The Tiff Over TIF: A Review of the Literature Examining the Effectiveness of the Tax Increment Financing," National Tax Journal, National Tax Association;National Tax Journal, vol. 67(3), pages 655-674, September.
    20. repec:rri:wpaper:200609 is not listed on IDEAS
    21. Gerritse, Michiel, 2014. "Competing for firms under agglomeration: Policy timing and welfare," Regional Science and Urban Economics, Elsevier, vol. 49(C), pages 48-57.
    22. Coulson, N. Edward & Liu, Crocker H. & Villupuram, Sriram V., 2013. "Urban economic base as a catalyst for movements in real estate prices," Regional Science and Urban Economics, Elsevier, vol. 43(6), pages 1023-1040.
    23. Reynolds, C. Lockwood & Rohlin, Shawn M., 2015. "The effects of location-based tax policies on the distribution of household income: Evidence from the federal Empowerment Zone program," Journal of Urban Economics, Elsevier, vol. 88(C), pages 1-15.
    24. Robert W. Wassmer, 1994. "Can Local Incentives Alter a Metropolitan City's Economic Development?," Urban Studies, Urban Studies Journal Limited, vol. 31(8), pages 1251-1278, October.
    25. Weber, Rachel & Bhatta, Saurav Dev & Merriman, David, 2007. "Spillovers from tax increment financing districts: Implications for housing price appreciation," Regional Science and Urban Economics, Elsevier, vol. 37(2), pages 259-281, March.
    26. Sekhon, Jasjeet S., 2011. "Multivariate and Propensity Score Matching Software with Automated Balance Optimization: The Matching package for R," Journal of Statistical Software, Foundation for Open Access Statistics, vol. 42(i07).
    27. Michael Broadway, 1989. "A comparison of patterns of urban deprivation between Canadian and U.S. cities," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 21(5), pages 531-551, October.
    28. Jan K. Brueckner, 2003. "Strategic Interaction Among Governments: An Overview of Empirical Studies," International Regional Science Review, , vol. 26(2), pages 175-188, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ahmed Rachid El-Khattabi & T. William Lester, 2019. "Does Tax Increment Financing Pass the “But-for†Test in Missouri?," Economic Development Quarterly, , vol. 33(3), pages 187-202, August.
    2. Twyla Blackmond Larnell & Davia Cox Downey, 2019. "Tax Increment Financing in Chicago: The Perplexing Relationship Between Blight, Race, and Property Values," Economic Development Quarterly, , vol. 33(4), pages 316-330, November.
    3. Czurylo, Todd, 2023. "The effect of tax increment financing districts on job creation in Chicago," Journal of Urban Economics, Elsevier, vol. 134(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Czurylo, Todd, 2023. "The effect of tax increment financing districts on job creation in Chicago," Journal of Urban Economics, Elsevier, vol. 134(C).
    2. Felix, R. Alison & Hines, James R., 2013. "Who offers tax-based business development incentives?," Journal of Urban Economics, Elsevier, vol. 75(C), pages 80-91.
    3. Ahmed Rachid El-Khattabi & T. William Lester, 2019. "Does Tax Increment Financing Pass the “But-for†Test in Missouri?," Economic Development Quarterly, , vol. 33(3), pages 187-202, August.
    4. Hanson, Andrew, 2009. "Local employment, poverty, and property value effects of geographically-targeted tax incentives: An instrumental variables approach," Regional Science and Urban Economics, Elsevier, vol. 39(6), pages 721-731, November.
    5. Phuong Nguyen-Hoang, 2014. "Tax Increment Financing and Education Expenditures: The Case of Iowa," Education Finance and Policy, MIT Press, vol. 9(4), pages 515-540, October.
    6. Brent C. Smith, 2009. "If You Promise to Build It, Will They Come? The Interaction between Local Economic Development Policy and the Real Estate Market: Evidence from Tax Increment Finance Districts," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 37(2), pages 209-234, June.
    7. Yadavalli, Anita & Delgado, Michael, 2018. "Tax Increment Financing and Spatial Spillovers," 2018 Annual Meeting, August 5-7, Washington, D.C. 274490, Agricultural and Applied Economics Association.
    8. Susan Mason & Kenneth P. Thomas, 2010. "Tax Increment Financing in Missouri: An Analysis of Determinants, Competitive Dynamics, Equity, and Path Dependency," Economic Development Quarterly, , vol. 24(2), pages 169-179, May.
    9. T. William Lester, 2014. "Does Chicago’s Tax Increment Financing (TIF) Programme Pass the ‘But-for’ Test? Job Creation and Economic Development Impacts Using Time-series Data," Urban Studies, Urban Studies Journal Limited, vol. 51(4), pages 655-674, March.
    10. Smith, Brent C., 2006. "The impact of tax increment finance districts on localized real estate: Evidence from Chicago's multifamily markets," Journal of Housing Economics, Elsevier, vol. 15(1), pages 21-37, March.
    11. Anita Yadavalli, 2017. "The Effect of Enterprise Zone-Related Tax Savings on Economic Development: A Generalized Propensity Score Approach," Review of Economics & Finance, Better Advances Press, Canada, vol. 10, pages 83-96, November.
    12. Neumark, David & Simpson, Helen, 2015. "Place-Based Policies," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 1197-1287, Elsevier.
    13. Jasper Beekmans & Huub Ploegmakers & Karel Martens & Erwin van der Krabben, 2016. "Countering decline of industrial sites: Do local economic development policies target the neediest places?," Urban Studies, Urban Studies Journal Limited, vol. 53(14), pages 3027-3047, November.
    14. Paul F. Byrne, 2006. "Determinants of Property Value Growth for Tax Increment Financing Districts," Economic Development Quarterly, , vol. 20(4), pages 317-329, November.
    15. Huub Ploegmakers & Pascal Beckers, 2015. "Evaluating urban regeneration: An assessment of the effectiveness of physical regeneration initiatives on run-down industrial sites in the Netherlands," Urban Studies, Urban Studies Journal Limited, vol. 52(12), pages 2151-2169, September.
    16. Charles W. Swenson, 2015. "The Death of California Redevelopment Areas," Economic Development Quarterly, , vol. 29(3), pages 211-228, August.
    17. Paul F. Byrne, 2010. "Does Tax Increment Financing Deliver on Its Promise of Jobs? The Impact of Tax Increment Financing on Municipal Employment Growth," Economic Development Quarterly, , vol. 24(1), pages 13-22, February.
    18. Twyla Blackmond Larnell & Davia Cox Downey, 2019. "Tax Increment Financing in Chicago: The Perplexing Relationship Between Blight, Race, and Property Values," Economic Development Quarterly, , vol. 33(4), pages 316-330, November.
    19. Hanson, Andrew & Rohlin, Shawn, 2013. "Do spatially targeted redevelopment programs spillover?," Regional Science and Urban Economics, Elsevier, vol. 43(1), pages 86-100.
    20. Andrew Hanson, 2021. "Taxes and Economic Development: An Update on the State of the Economics Literature," Economic Development Quarterly, , vol. 35(3), pages 232-253, August.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:ecdequ:v:31:y:2017:i:4:p:312-325. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.