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Incidence and Substitution in Enterprise Zone Programs: The Case of Colorado

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Author Info

  • Devon Lynch

    (Department of Economics, University of Massachusetts Dartmouth, North Dartmouth, MA, USA)

  • Jeffrey S. Zax

    (Department of Economics, University of Colorado at Boulder, Boulder, CO, USA, zax@colorado.edu)

Abstract

Among 53,334 urban Colorado establishments, geographic information systems (GIS) techniques identify those that are and are not in enterprise zones (EZs). EZs have no effect on payroll per worker. Therefore, subsidy incidence is not on labor. Urban EZs do not increase employment per establishment, implying that subsidies induce net substitution effects for capital that counteract scale effects on labor. Rural EZs increase employment in the smallest of 13,278 establishments, implying that capital is less substitutable for labor with rural production functions and subsidy mixes. Employment effects differ across EZs. Equilibrium incidence of subsidies is probably on immobile factors such as commercial real estate.

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Bibliographic Info

Article provided by in its journal Public Finance Review.

Volume (Year): 39 (2011)
Issue (Month): 2 (March)
Pages: 226-255

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Handle: RePEc:sae:pubfin:v:39:y:2011:i:2:p:226-255

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Related research

Keywords: enterprise zones; location-specific subsidies;

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Cited by:
  1. Florian MAYNERIS & Loriane PY, 2013. "The Efficiency Of Enterprise Zone Programs Some Conflicting Results?," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 38, pages 209-224.
  2. David Neumark & Helen Simpson, 2014. "Place-Based Policies," NBER Working Papers 20049, National Bureau of Economic Research, Inc.
  3. Mayneris, F. & Py, L., 2014. "The efficiency of enterprise zone programs: some conflicting results?," Working papers 474, Banque de France.
  4. Monica Andini & Guido de Blasio, 2013. "Local development that money can’t buy: Italy’s Contratti di Programma," Temi di discussione (Economic working papers) 915, Bank of Italy, Economic Research and International Relations Area.
  5. 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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