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Do Tax Incentives Affect Business Location and Economic Development? Evidence from State Film Incentives

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  • Button, Patrick

    (Tulane University)

Abstract

I estimate the impacts of recently-popular U.S. state film incentives on filming location, film industry employment, wages, and establishments, and spillover impacts on related industries. I compile a detailed database of incentives, matching this with TV series and feature film data from the Internet Movie Database (IMDb) and Studio System, and establishment and employment data from the Quarterly Census of Employment and Wages and Country Business Patterns. I compare these outcomes in states before and after they adopt incentives, relative to similar states that did not adopt incentives over the same time period (a panel difference-in-differences). I find that TV series filming increases by 6.3 to 55.4% (0.67 to 1.50 additional TV series) after incentive adoption. However, there is no meaningful effect on feature films, and employment, wages, and establishments in the film industry and in related industries. These results show that the ability for tax incentives to affect business location decisions and economic development is mixed, suggesting that even with aggressive incentives, and "footloose" filming, incentives can have little impact.

Suggested Citation

  • Button, Patrick, 2019. "Do Tax Incentives Affect Business Location and Economic Development? Evidence from State Film Incentives," IZA Discussion Papers 12225, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp12225
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    More about this item

    Keywords

    economic development; tax incentives; state taxation; business location; film industry;
    All these keywords.

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
    • Z11 - Other Special Topics - - Cultural Economics - - - Economics of the Arts and Literature

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