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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. 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.
  2. 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 g2011-13, Institut National de la Statistique et des Etudes Economiques, DESE.
  3. 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, vol. 36(1).
  4. Eleonora Patacchini & Yves Zenou, 2007. "Spatial dependence in local unemployment rates," Journal of Economic Geography, Oxford University Press, vol. 7(2), pages 169-191, March.
  5. Gobillon, Laurent & Magnac, Thierry & Selod, Harris, 2012. "Do unemployed workers benefit from enterprise zones? The French experience," Journal of Public Economics, Elsevier, vol. 96(9-10), pages 881-892.
  6. 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).
  7. P. Givord & S. Quantin & C. Trevien, 2012. "A Long-Term Evaluation of the First Generation of the French Urban Enterprise Zones," Documents de Travail de la DESE - Working Papers of the DESE g2012-01, Institut National de la Statistique et des Etudes Economiques, DESE.
  8. 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.
  9. Matthew Freedman, 2013. "Targeted Business Incentives and Local Labor Markets," Journal of Human Resources, University of Wisconsin Press, vol. 48(2), pages 311-344.
  10. Edward L. Glaeser & Joshua D. Gottlieb, 2008. "The Economics of Place-Making Policies," NBER Working Papers 14373, National Bureau of Economic Research, Inc.
  11. 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, vol. 415(1), pages 81-96.
  12. Jed Kolko & David Neumark, 2009. "Do Some Enterprise Zones Create Jobs?," NBER Working Papers 15206, National Bureau of Economic Research, Inc.
  13. Angus Deaton, 2010. "Instruments, Randomization, and Learning about Development," Journal of Economic Literature, American Economic Association, vol. 48(2), pages 424-55, June.
  14. Patrick Kline & Enrico Moretti, 2013. "Place Based Policies with Unemployment," American Economic Review, American Economic Association, vol. 103(3), pages 238-43, May.
  15. Patrick Kline, 2010. "Place Based Policies, Heterogeneity, and Agglomeration," American Economic Review, American Economic Association, vol. 100(2), pages 383-87, May.
  16. 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.
  17. 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, vol. 95(7), pages 779-797.
  18. 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, vol. 95(7-8), pages 779-797, August.
  19. Briant, Anthony & Lafourcade, Miren & Schmutz, Benoît, 2013. "Can Tax Breaks Beat Geography? Lessons from the French Enterprise Zone Experience," CEPREMAP Working Papers (Docweb) 1316, CEPREMAP.
  20. Wang, Jin, 2013. "The economic impact of Special Economic Zones: Evidence from Chinese municipalities," Journal of Development Economics, Elsevier, vol. 101(C), pages 133-147.
  21. Freedman, Matthew, 2012. "Teaching new markets old tricks: The effects of subsidized investment on low-income neighborhoods," Journal of Public Economics, Elsevier, vol. 96(11), pages 1000-1014.
  22. 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.
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Citations

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Cited by:
  1. Mayer,T. & Mayneris, F. & Py, L., 2013. "The impact of Urban Enterprise Zones on establishment location decisions: Evidence from French ZFUs," Working papers 458, Banque de France.
  2. Kline, Patrick & Moretti, Enrico, 2013. "People, Places and Public Policy: Some Simple Welfare Economics of Local Economic Development Programs," IZA Discussion Papers 7735, Institute for the Study of Labor (IZA).
  3. Florian MAYNERIS & Loriane PY, 2013. "The efficiency of enterprise zone programs Some conflicting results?," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2013025, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  4. 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 g2011-13, Institut National de la Statistique et des Etudes Economiques, DESE.
  5. repec:hal:wpaper:halshs-00728195 is not listed on IDEAS
  6. Briant, Anthony & Lafourcade, Miren & Schmutz, Benoît, 2013. "Can Tax Breaks Beat Geography? Lessons from the French Enterprise Zone Experience," CEPREMAP Working Papers (Docweb) 1316, CEPREMAP.
  7. 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, vol. 10(2), pages 08-13, 08.
  8. 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).
  9. 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.
  10. David Neumark & Helen Simpson, 2014. "Place-Based Policies," NBER Working Papers 20049, National Bureau of Economic Research, Inc.
  11. Luc Behaghel & Adrien Lorenceau & Simon Quantin, 2012. "Tax exemptions and rural development: Evidence from a quasi-experiment," PSE Working Papers halshs-00728195, HAL.
  12. 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.

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