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Can Tax Breaks Beat Geography? Lessons from the French Enterprise Zone Experience

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  • Briant, Anthony
  • Lafourcade, Miren
  • Schmutz, Benoît

Abstract

This paper demonstrates that geography matters to the effectiveness of place-based policies, using the French enterprise zone program as a case study. Using a series of indicators of spatial isolation for treated and non treated neighborhoods, we show that geographical heterogeneity determines the ability of the program to impact firms’ settlements, job creation and earnings. In particular, whereas a focus on the average impact of the program would lead to the conclusion that it mostly succeeded in displacing pre-existing firms, a lower level of spatial isolation was a clear determinant of the decision to create new firms from scratch.

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Bibliographic Info

Paper provided by CEPREMAP in its series CEPREMAP Working Papers (Docweb) with number 1316.

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Length: 44 pages
Date of creation: Dec 2013
Date of revision:
Handle: RePEc:cpm:docweb:1316

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Keywords: enterprise zones; spatial isolation; transportation accessibility; urban severance;

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References

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  1. Matias Busso & Jesse Gregory & Patrick M. Kline, 2010. "Assessing the Incidence and Efficiency of a Prominent Place Based Policy," NBER Working Papers 16096, National Bureau of Economic Research, Inc.
  2. Patrick Kline, 2010. "Place Based Policies, Heterogeneity, and Agglomeration," American Economic Review, American Economic Association, American Economic Association, vol. 100(2), pages 383-87, May.
  3. Mayer,T. & Mayneris, F. & Py, L., 2013. "The impact of Urban Enterprise Zones on establishment location decisions: Evidence from French ZFUs," Working papers, Banque de France 458, Banque de France.
  4. Ham, John C. & Swenson, Charles & Imrohoroglu, Ayse & Song, Heonjae, 2011. "Government programs can improve local labor markets: Evidence from State Enterprise Zones, Federal Empowerment Zones and Federal Enterprise Community," Journal of Public Economics, Elsevier, Elsevier, vol. 95(7-8), pages 779-797, August.
  5. Gobillon, Laurent & Magnac, Thierry & Selod, Harris, 2010. "Do unemployed workers benefit from enterprise zones? The French experience," IDEI Working Papers, Institut d'Économie Industrielle (IDEI), Toulouse 645, Institut d'Économie Industrielle (IDEI), Toulouse.
  6. Freedman, Matthew, 2012. "Teaching new markets old tricks: The effects of subsidized investment on low-income neighborhoods," Journal of Public Economics, Elsevier, Elsevier, vol. 96(11), pages 1000-1014.
  7. 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.
  8. Wang, Jin, 2013. "The economic impact of Special Economic Zones: Evidence from Chinese municipalities," Journal of Development Economics, Elsevier, Elsevier, vol. 101(C), pages 133-147.
  9. 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.
  10. P. Givord & R. Rathelot & P. Sillard, 2011. "Place-based tax exemptions and displacement effects: An evaluation of the Zones Franches Urbaines program," Documents de Travail de la DESE - Working Papers of the DESE, Institut National de la Statistique et des Etudes Economiques, DESE g2011-13, Institut National de la Statistique et des Etudes Economiques, DESE.
  11. Patrick Kline & Enrico Moretti, 2013. "Place Based Policies with Unemployment," NBER Working Papers 18758, National Bureau of Economic Research, Inc.
  12. Landers, Jim, 2006. "Why Don't Enterprise Zones Work? Estimates of the Extent that EZ Benefits are Capitalized into Property Values," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, Mid-Continent Regional Science Association, vol. 36(1).
  13. Angus Deaton, 2010. "Instruments, randomization, and learning about development," Working Papers, Princeton University, Woodrow Wilson School of Public and International Affairs, Research Program in Development Studies. 1224, Princeton University, Woodrow Wilson School of Public and International Affairs, Research Program in Development Studies..
  14. Ham, John C. & Swenson, Charles & İmrohoroğlu, Ayşe & Song, Heonjae, 2011. "Government programs can improve local labor markets: Evidence from State Enterprise Zones, Federal Empowerment Zones and Federal Enterprise Community," Journal of Public Economics, Elsevier, Elsevier, vol. 95(7), pages 779-797.
  15. Jed Kolko & David Neumark, 2009. "Do Some Enterprise Zones Create Jobs?," NBER Working Papers 15206, National Bureau of Economic Research, Inc.
  16. Bondonio, Daniele & Engberg, John, 2000. "Enterprise zones and local employment: evidence from the states' programs," Regional Science and Urban Economics, Elsevier, Elsevier, vol. 30(5), pages 519-549, September.
  17. Patrick Sillard & Roland Rathelot, 2008. "Zones Franches Urbaines : quels effets sur l'emploi salarié et les créations d'établissements ?," Économie et Statistique, Programme National Persée, Programme National Persée, vol. 415(1), pages 81-96.
  18. 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, Elsevier, vol. 37(1), pages 121-136, January.
  19. Edward L. Glaeser & Joshua D. Gottlieb, 2008. "The Economics of Place-Making Policies," NBER Working Papers 14373, National Bureau of Economic Research, Inc.
  20. Neumark, David & Kolko, Jed, 2010. "Do enterprise zones create jobs? Evidence from California's enterprise zone program," Journal of Urban Economics, Elsevier, vol. 68(1), pages 1-19, July.
  21. Eleonora Patacchini & Yves Zenou, 2007. "Spatial dependence in local unemployment rates," Journal of Economic Geography, Oxford University Press, Oxford University Press, vol. 7(2), pages 169-191, March.
  22. Matthew Freedman, 2013. "Targeted Business Incentives and Local Labor Markets," Journal of Human Resources, University of Wisconsin Press, vol. 48(2), pages 311-344.
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Citations

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Cited by:
  1. Kline, Patrick & Moretti, Enrico, 2013. "People, Places and Public Policy: Some Simple Welfare Economics of Local Economic Development Programs," CEPR Discussion Papers, C.E.P.R. Discussion Papers 9741, C.E.P.R. Discussion Papers.
  2. Philippe Askenazy & Christine Erhel, 2012. "The French Labour Market and the (Not So) Great Recession," CESifo DICE Report, Ifo Institute for Economic Research at the University of Munich, Ifo Institute for Economic Research at the University of Munich, vol. 10(2), pages 08-13, 08.
  3. Mayer,T. & Mayneris, F. & Py, L., 2013. "The impact of Urban Enterprise Zones on establishment location decisions: Evidence from French ZFUs," Working papers, Banque de France 458, Banque de France.
  4. 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, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 38, pages 209-224.
  5. Kristian Behrens, 2013. "Strength in Numbers? The Weak Effect of Manufacturing Clusters on Canadian Productivity," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 377, April.
  6. Briant, Anthony & Lafourcade, Miren & Schmutz, Benoît, 2013. "Can Tax Breaks Beat Geography? Lessons from the French Enterprise Zone Experience," CEPREMAP Working Papers (Docweb), CEPREMAP 1316, CEPREMAP.
  7. Givord, Pauline & Rathelot, Roland & Sillard, Patrick, 2013. "Place-based tax exemptions and displacement effects: An evaluation of the Zones Franches Urbaines program," Regional Science and Urban Economics, Elsevier, Elsevier, vol. 43(1), pages 151-163.
  8. David Neumark & Helen Simpson, 2014. "Place-Based Policies," NBER Working Papers 20049, National Bureau of Economic Research, Inc.
  9. 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).
  10. Luc Behaghel & Adrien Lorenceau & Simon Quantin, 2012. "Tax exemptions and rural development: Evidence from a quasi-experiment," PSE Working Papers halshs-00728195, HAL.
  11. repec:hal:wpaper:halshs-00728195 is not listed on IDEAS

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