Solving the Problems of Economic Development Incentives
In: Reining in the Competition for Capital
AbstractThis 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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local economic development; regional economic development; incentives; tax incentives;
Other versions of this item:
- Timothy J. Bartik, 2005. "Solving the Problems of Economic Development Incentives," Growth and Change, Gatton College of Business and Economics, University of Kentucky, vol. 36(2), pages 139-166.
- Timothy J. Bartik, . "Solving the Problems of Economic Development Incentives," Upjohn Working Papers and Journal Articles tjb2005gc, W.E. Upjohn Institute for Employment Research.
- R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
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