IDEAS home Printed from https://ideas.repec.org/p/ctl/louvir/2012019.html
   My bibliography  Save this paper

The Impact of Urban Enterprise Zones on Establishments' Location Decisions: Evidence from French ZFUs

Author

Listed:
  • Thierry MAYER

    (Sciences-Po, CEPII, CEPR)

  • Florian MAYNERIS

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) and Center for Operations Research and Econometrics (CORE))

  • Loriane PY

    (Banque de France)

Abstract

In this paper, we study the impact of a French enterprise zones program the "Zones Franches Urbaines" (ZFUs) policy on establishments' location decisions. Our empirical analysis is based on a micro-geographic dataset which provides exhaustive information on the location of establishments in France over the period 2000-2007 at the census block level. We use a difference in difference approach combining spatial and time differencing. We also do triple difference estimations, using the fact that targeted urban areas have been selected in different waves over time. Finally, we exploit a discontinuity in the eligibility criteria of the policy as an exogenous source of variation to estimate the impact of the treatment. Our results show that the French ZFU policy has a positive and sizable impact on location choices. However, we also find that the policy mostly generates displacement effects, in particular through relocation of firms from the un-treated to the treated part within municipalities. Finally, the impact is shown to be highly heterogeneous across zones, firms and industries. The overall cost of moving establishments within municipalities is relatively high.

Suggested Citation

  • Thierry MAYER & Florian MAYNERIS & Loriane PY, 2012. "The Impact of Urban Enterprise Zones on Establishments' Location Decisions: Evidence from French ZFUs," LIDAM Discussion Papers IRES 2012019, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    • Handle: RePEc:ctl:louvir:2012019
    as

    Download full text from publisher

    File URL: http://sites.uclouvain.be/econ/DP/IRES/2012019.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Crozet, Matthieu & Mayer, Thierry & Mucchielli, Jean-Louis, 2004. "How do firms agglomerate? A study of FDI in France," Regional Science and Urban Economics, Elsevier, vol. 34(1), pages 27-54, January.
    2. Anthony Briant & Miren Lafourcade & Benoît Schmutz, 2015. "Can Tax Breaks Beat Geography? Lessons from the French Enterprise Zone Experience," American Economic Journal: Economic Policy, American Economic Association, vol. 7(2), pages 88-124, May.
    3. 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.
    4. 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.
    5. Robert T. Greenbaum & John B. Engberg, 2004. "The impact of state enterprise zones on urban manufacturing establishments," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 23(2), pages 315-339.
    6. Gilles Duranton & Laurent Gobillon & Henry G. Overman, 2011. "Assessing the Effects of Local Taxation using Microgeographic Data," Economic Journal, Royal Economic Society, vol. 121(555), pages 1017-1046, September.
    7. Papke, Leslie E., 1994. "Tax policy and urban development : Evidence from the Indiana enterprise zone program," Journal of Public Economics, Elsevier, vol. 54(1), pages 37-49, May.
    8. Criscuolo, Chiara & Martin, Ralf & Overman, Henry & Van Reenen, John, 2012. "The Causal Effects of an Industrial Policy," IZA Discussion Papers 6323, Institute of Labor Economics (IZA).
    9. Devereux, Michael P. & Griffith, Rachel & Simpson, Helen, 2007. "Firm location decisions, regional grants and agglomeration externalities," Journal of Public Economics, Elsevier, vol. 91(3-4), pages 413-435, April.
    10. Joel A. Elvery, 2009. "The Impact of Enterprise Zones on Resident Employment," Economic Development Quarterly, , vol. 23(1), pages 44-59, February.
    11. 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.
    12. 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.
    13. Keith Head & Thierry Mayer, 2004. "Market Potential and the Location of Japanese Investment in the European Union," The Review of Economics and Statistics, MIT Press, vol. 86(4), pages 959-972, November.
    14. Hanson, Andrew, 2009. "Local employment, poverty, and property value effects of geographically-targeted tax incentives: An instrumental variables approach," Regional Science and Urban Economics, Elsevier, vol. 39(6), pages 721-731, November.
    15. Ai, Chunrong & Norton, Edward C., 2003. "Interaction terms in logit and probit models," Economics Letters, Elsevier, vol. 80(1), pages 123-129, July.
    16. Crozet, Matthieu & Mayer, Thierry & Mucchielli, Jean-Louis, 2004. "How do firms agglomerate? A study of FDI in France," Regional Science and Urban Economics, Elsevier, vol. 34(1), pages 27-54, January.
    17. Devereux, Michael P. & Griffith, Rachel, 1998. "Taxes and the location of production: evidence from a panel of US multinationals," Journal of Public Economics, Elsevier, vol. 68(3), pages 335-367, June.
    18. Daniele Bondonio, 2003. "Do Tax Incentives Affect Local Economic Growth? What Mean Impacts Miss in the Analysis of Enterprise Zone Policies," Working Papers 03-17, Center for Economic Studies, U.S. Census Bureau.
    19. repec:hal:wpspec:info:hdl:2441/10192 is not listed on IDEAS
    20. Richard E. Baldwin & Toshihiro Okubo, 2006. "Heterogeneous firms, agglomeration and economic geography: spatial selection and sorting," Journal of Economic Geography, Oxford University Press, vol. 6(3), pages 323-346, June.
    21. 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.
    22. Keith Head & Thierry Mayer, 2004. "Market Potential and the Location of Japanese Firms in the European Union," Sciences Po publications info:hdl:2441/10192, Sciences Po.
    23. repec:hal:spmain:info:hdl:2441/c8dmi8nm4pdjkuc9g8o118937 is not listed on IDEAS
    24. repec:hal:wpspec:info:hdl:2441/c8dmi8nm4pdjkuc9g8o118937 is not listed on IDEAS
    25. Stephen Billings, 2009. "Do Enterprise Zones Work?," Public Finance Review, , vol. 37(1), pages 68-93, January.
    26. 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, vol. 43(1), pages 151-163.
    27. Roland Rathelot & Patrick Sillard, 2008. "The Importance of Local Corporate Taxes in Business Location Decisions: Evidence From French Micro Data," Economic Journal, Royal Economic Society, vol. 118(527), pages 499-514, March.
    28. 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.
    29. Henry Overman & Elias Einio, 2012. "The Effects of Spatially Targeted Enterprise Initiatives: Evidence from UK LEGI," ERSA conference papers ersa12p164, European Regional Science Association.
    30. Richard Baldwin & Toshihiro Okubo, 2009. "Tax Reform, Delocation, and Heterogeneous Firms," Scandinavian Journal of Economics, Wiley Blackwell, vol. 111(4), pages 741-764, December.
    31. 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.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Thierry Mayer & Florian Mayneris & Loriane Py, 2017. "The impact of Urban Enterprise Zones on establishment location decisions and labor market outcomes: evidence from France," Journal of Economic Geography, Oxford University Press, vol. 17(4), pages 709-752.
    2. repec:hal:spmain:info:hdl:2441/3l4arseauo82kr3cm0qr8uihmg is not listed on IDEAS
    3. repec:hal:spmain:info:hdl:2441/125h4fg7e89gi95ui3ml6ggod9 is not listed on IDEAS
    4. Thierry Mayer & Florian Mayneris & Loriane Py, 2017. "The impact of Urban Enterprise Zones on establishment location decisions and labor market outcomes: evidence from France," Journal of Economic Geography, Oxford University Press, vol. 17(4), pages 709-752.
    5. repec:hal:spmain:info:hdl:2441/1nfkh9tn2m87ko6gb634e2ufgl is not listed on IDEAS
    6. Thierry Mayer & Florian Mayneris & Loriane Py, 2017. "The impact of Urban Enterprise Zones on establishment location decisions and labor market outcomes: evidence from France," Journal of Economic Geography, Oxford University Press, vol. 17(4), pages 709-752.
    7. Neumark, David & Simpson, Helen, 2015. "Place-Based Policies," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 1197-1287, Elsevier.
    8. 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.
    9. Nidhi Chaudhary & Jonathan Potter, 2019. "Evaluation of the local employment impacts of enterprise zones: A critique," Urban Studies, Urban Studies Journal Limited, vol. 56(10), pages 2112-2159, August.
    10. Miren Lafourcade & Florian Mayneris, 2017. "En Finir avec les ghettos urbains ?," PSE-Ecole d'économie de Paris (Postprint) halshs-01884340, HAL.
    11. Givord, Pauline & Quantin, Simon & Trevien, Corentin, 2018. "A long-term evaluation of the first generation of French urban enterprise zones," Journal of Urban Economics, Elsevier, vol. 105(C), pages 149-161.
    12. Gibbons, Stephen & Overman, Henry & Sarvimäki, Matti, 2021. "The local economic impacts of regeneration projects: Evidence from UK's single regeneration budget," Journal of Urban Economics, Elsevier, vol. 122(C).
    13. Patrick Kline & Enrico Moretti, 2014. "People, Places, and Public Policy: Some Simple Welfare Economics of Local Economic Development Programs," Annual Review of Economics, Annual Reviews, vol. 6(1), pages 629-662, August.
    14. Elias Einiö & Henry G. Overman, 2016. "The (Displacement) Effects of Spatially Targeted Enterprise Initiatives: Evidence from UK LEGI," SERC Discussion Papers 0191, Centre for Economic Performance, LSE.
    15. Sumei Zhang, 2019. "Rethinking U.S. enterprise zones: The role of research design in program evaluation," Local Economy, London South Bank University, vol. 34(6), pages 545-571, September.
    16. David Neumark & Timothy Young, 2021. "Heterogeneous Effects of State Enterprise Zone Programs in the Shorter Run and Longer Run," Economic Development Quarterly, , vol. 35(2), pages 91-107, May.
    17. David Neumark & Timothy Young, 2020. "Heterogeneous Effects of State Enterprise Zone Programs in the Shorter Run and Longer Run," NBER Working Papers 27545, National Bureau of Economic Research, Inc.
    18. 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, vol. 43(1), pages 151-163.
    19. Reynolds, C. Lockwood & Rohlin, Shawn M., 2015. "The effects of location-based tax policies on the distribution of household income: Evidence from the federal Empowerment Zone program," Journal of Urban Economics, Elsevier, vol. 88(C), pages 1-15.
    20. Binkai Chen & Ming Lu & Christopher Timmins & Kuanhu Xiang, 2019. "Spatial Misallocation: Evaluating Place-Based Policies Using a Natural Experiment in China," NBER Working Papers 26148, National Bureau of Economic Research, Inc.
    21. Gibbons, Steve & Overman, Henry & Sarvimäki, Matti, 2017. "The local economic impacts of regeneration projects: Evidence from UK’s Single Regeneration Budget," Working Papers 92, VATT Institute for Economic Research.
    22. Hanson, Andrew & Rohlin, Shawn, 2013. "Do spatially targeted redevelopment programs spillover?," Regional Science and Urban Economics, Elsevier, vol. 43(1), pages 86-100.
    23. Andrew Hanson, 2021. "Taxes and Economic Development: An Update on the State of the Economics Literature," Economic Development Quarterly, , vol. 35(3), pages 232-253, August.

    More about this item

    Keywords

    firm location; enterprise zones; spatial differencing;
    All these keywords.

    JEL classification:

    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ctl:louvir:2012019. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Virginie LEBLANC (email available below). General contact details of provider: https://edirc.repec.org/data/iruclbe.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.