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Do Tax Incentives Affect Local Economic Growth? What Mean Impacts Miss in the Analysis of Enterprise Zone Policies

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  • Daniele Bondonio

Abstract

Geographically-targeted tax incentives remain popular initiatives in response to deteriorating economic conditions of urban and industrial areas. This paper exploits the exogenous variations of the U.S. state Enterprise Zone programs to estimate the impact of various incentive features on a number of dimensions of local economic growth. The econometric analysis uses plant level data to sort out growth outcomes into gross flows separately accounted for by new, existing, and vanishing businesses in the target areas. Results offer empirical evidence to support a number of specific policy recommendations and show that the impact of the incentives has more complex dynamics than those revealed by the null mean impact estimates obtained from analyzing net growth outcomes.

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File URL: ftp://ftp2.census.gov/ces/wp/2003/CES-WP-03-17.pdf
File Function: First version, 2003
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Bibliographic Info

Paper provided by Center for Economic Studies, U.S. Census Bureau in its series Working Papers with number 03-17.

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Length: 36 pages
Date of creation: Sep 2003
Date of revision:
Handle: RePEc:cen:wpaper:03-17

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Related research

Keywords: Tax incentives; Local economic growth; Enterprise Zones; Program evaluation;

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References

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  1. Heckman, James J & Ichimura, Hidehiko & Todd, Petra, 1998. "Matching as an Econometric Evaluation Estimator," Review of Economic Studies, Wiley Blackwell, vol. 65(2), pages 261-94, April.
  2. Leslie E. Papke, 1991. "Tax Policy and Urban Development: Evidence From The Indiana Enterprise Zone Program," NBER Working Papers 3945, National Bureau of Economic Research, Inc.
  3. Heckman, James J & Ichimura, Hidehiko & Todd, Petra E, 1997. "Matching as an Econometric Evaluation Estimator: Evidence from Evaluating a Job Training Programme," Review of Economic Studies, Wiley Blackwell, vol. 64(4), pages 605-54, October.
  4. Timothy J. Bartik, 2000. "Solving the Many Problems with Inner City Jobs," Upjohn Working Papers and Journal Articles 00-66, W.E. Upjohn Institute for Employment Research.
  5. Timothy J. Bartik & Richard D. Bingham, 1997. "Can Economic Development Programs be Evaluated?," Book chapters authored by Upjohn Institute researchers, in: Richard D. Bingham & Robert Mier (ed.), Dilemmas of Urban Economic Development, pages 246-290 W.E. Upjohn Institute for Employment Research.
  6. Leslie E. Papke, 1993. "What Do We Know about Enterprise Zones?," NBER Working Papers 4251, National Bureau of Economic Research, Inc.
  7. Marlon G. Boarnet, 2001. "Enterprise Zones and Job Creation: Linking Evaluation and Practice," Economic Development Quarterly, , vol. 15(3), pages 242-254, August.
  8. Timothy J. Bartik, 1991. "Who Benefits from State and Local Economic Development Policies?," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number wbsle.
  9. Alan H. Peters & Peter S. Fisher, 2002. "State Enterprise Zone Programs: Have They Worked?," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number sezp.
  10. James J. Heckman, 1989. "Choosing Among Alternative Nonexperimental Methods for Estimating the Impact of Social Programs: The Case of Manpower Training," NBER Working Papers 2861, National Bureau of Economic Research, Inc.
  11. Rajeev H. Dehejia & Sadek Wahba, 1998. "Causal Effects in Non-Experimental Studies: Re-Evaluating the Evaluation of Training Programs," NBER Working Papers 6586, National Bureau of Economic Research, Inc.
  12. Robinson, Chris, 1989. "The Joint Determination of Union Status and Union Wage Effects: Some Tests of Alternative Models," Journal of Political Economy, University of Chicago Press, vol. 97(3), pages 639-67, June.
  13. Timothy J. Bartik, 2003. "Local Economic Development Policies," Upjohn Working Papers and Journal Articles 03-91, W.E. Upjohn Institute for Employment Research.
  14. Bondonio, Daniele & Engberg, John, 2000. "Enterprise zones and local employment: evidence from the states' programs," Regional Science and Urban Economics, Elsevier, vol. 30(5), pages 519-549, September.
  15. Boarnet, Marlon G. & Bogart, William T., 1996. "Enterprise Zones and Employment: Evidence from New Jersey," Journal of Urban Economics, Elsevier, vol. 40(2), pages 198-215, September.
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Cited by:
  1. Matias Busso & Jesse Gregory & Patrick Kline, 2013. "Assessing the Incidence and Efficiency of a Prominent Place Based Policy," American Economic Review, American Economic Association, vol. 103(2), pages 897-947, April.
  2. Zenou, Yves, 2011. "Spatial versus Social Mismatch: The Strength of Weak Ties," IZA Discussion Papers 5507, Institute for the Study of Labor (IZA).
  3. Busso, Matias & Kline, Patrick, 2008. "Do Local Economic Development Programs Work? Evidence from the Federal Empowerment Zone Program," Working Papers 36, Yale University, Department of Economics.
  4. 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).
  5. Rachel Meltzer & Jenny Schuetz, 2010. "Bodegas or Bagel Shops? Neighborhood Differences in Retail & Household Services," Working Paper 33, USC Lusk Center for Real Estate.
  6. John C. Ham, 2010. "Government Programs Can Improve Local Labor Markets: Evidence from State Enterprise Zones, Federal Empowerment Zones and Federal Enterprise Communities," 2010 Meeting Papers 8, Society for Economic Dynamics.

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