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Do Unemployed Workers Benefit from Enterprise Zones? The French Experience

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Author Info

  • Gobillon, Laurent

    ()
    (INED, France)

  • Magnac, Thierry

    ()
    (University of Toulouse I)

  • Selod, Harris

    ()
    (Institut National de la Recherche Agronomique)

Abstract

This paper presents an impact evaluation of the French enterprise zone program which was initiated in 1997 to help unemployed workers find employment by granting a significant wage-tax exemption (about one third of total labor costs) to firms hiring at least 20% of their labor force locally. Drawing from a unique geo-referenced dataset of unemployment spells in the Paris region over an extensive period of time (1993-2003), we are able to measure the direct effect of the program on unemployment duration, distinguishing between short- and medium-term effects. This is done by implementing an original two-stage empirical strategy using individual data in the first stage and aggregate data and conditional linear matching techniques in the second stage. We show that although the enterprise zones program tended to "pick winners", it is likely to be cost-ineffective. It had a small but significant effect on the rate at which unemployed workers find a job (which is increased by a modest 3 percent). This effect is localized and significant only in the short run (i.e. at best during the 3 years that follow the start of the policy).

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6357.

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Length: 44 pages
Date of creation: Feb 2012
Date of revision:
Publication status: published in: Journal of Public Economics, 2012, 96 (9), 881 - 892
Handle: RePEc:iza:izadps:dp6357

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Keywords: enterprise zone; evaluation of programs; unemployment; regional policies;

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References

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  1. Mauer, David C. & Ott, Steven H., 1999. "On the Optimal Structure of Government Subsidies for Enterprise Zones and Other Locational Development Programs," Journal of Urban Economics, Elsevier, vol. 45(3), pages 421-450, May.
  2. 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.
  3. Laurent Gobillon & Thierry Magnac & Harris Selod, 2011. "The effect of location on finding a job in the Paris region," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 26(7), pages 1079-1112, November.
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  5. Gobillon, Laurent & Magnac, Thierry & Selod, Harris, 2010. "Do Unemployed Workers Benefit from Enterprise Zones? The French Experience," CEPR Discussion Papers 8084, C.E.P.R. Discussion Papers.
  6. A. Smith, Jeffrey & E. Todd, Petra, 2005. "Does matching overcome LaLonde's critique of nonexperimental estimators?," Journal of Econometrics, Elsevier, vol. 125(1-2), pages 305-353.
  7. Manning, Alan & Pischke, Jörn-Steffen, 2006. "Comprehensive versus Selective Schooling in England and Wales: What Do We Know?," CEPR Discussion Papers 5653, C.E.P.R. Discussion Papers.
  8. Peter S. Fisher, 1997. "Tax and spending incentives and enterprise zones," New England Economic Review, Federal Reserve Bank of Boston, issue Mar, pages 109-138.
  9. Raphael W. Bostic & Allen C. Prohofsky, 2006. "Enterprise Zones and Individual Welfare: A Case Study of California," Journal of Regional Science, Wiley Blackwell, vol. 46(2), pages 175-203.
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  11. Sylvie Blasco & François Fontaine, 2010. "Étudier le non-recours à l'assurance chômage," Revue économique, Presses de Sciences-Po, vol. 0(5), pages 933-943.
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  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. David Neumark & Jed Kolko, 2008. "Do Enterprise Zones Create Jobs? Evidence from California's Enterprise Zone Program," NBER Working Papers 14530, National Bureau of Economic Research, Inc.
  18. Matias Busso & Patrick Kline, 2008. "Do Local Economic Development Programs Work? Evidence from the Federal Empowerment Zone Program," Cowles Foundation Discussion Papers 1639, Cowles Foundation for Research in Economics, Yale University.
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  20. Cynthia L. Rogers & Jill L. Tao, 2004. "Quasi-Experimental Analysis of Targeted Economic Development Programs: Lessons from Florida," Economic Development Quarterly, , vol. 18(3), pages 269-285, August.
  21. 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.
  22. Richard Blundell & Monica Costa Dias & Costas Meghir & John Van Reenen, 2001. "Evaluating the employment impact of a mandatory job search assistance program," IFS Working Papers W01/20, Institute for Fiscal Studies.
  23. O'Keefe, Suzanne, 2004. "Job creation in California's enterprise zones: a comparison using a propensity score matching model," Journal of Urban Economics, Elsevier, vol. 55(1), pages 131-150, January.
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