Tax Policy and Urban Development: Evidence From The Indiana Enterprise Zone Program
AbstractIn the last decade, most states have targeted certain depressed areas for revitalization by providing a combination of labor and capital tax incentives to firms operating in the "enterprise zone" (EZ). Despite the large number of state initiatives, and the frequent re-introduction of federal EZ legislation, there have been few statistical analyses of the effect of EZs apart from surveys of plan administrators. This paper analyzes the effect of the Indiana EZ program on local employment and investment using a panel of local taxing jurisdictions. In 1988, the direct budgetary costs of the Indiana program totaled over $11 million, averaging $13,933 per participating firm, $4,564 per new job, and $31,113 per new zone resident job. I estimate that zone designation initially reduces the value of depreciable personal property by about 13 percent, but also reduces unemployment claims in the zone and surrounding community by 19 percent. Both estimates are statistically significant. The value of inventories in Indiana zones is 8 percent higher than it otherwise would be, and the estimated effect is marginally statistically significant.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 3945.
Date of creation: Dec 1991
Date of revision:
Publication status: published as Journal of Public Economics, vol 54, no. 1, May 1994, p. 37-49
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Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
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Other versions of this item:
- Papke, Leslie E., 1994. "Tax policy and urban development : Evidence from the Indiana enterprise zone program," Journal of Public Economics, Elsevier, Elsevier, vol. 54(1), pages 37-49, May.
- H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
- H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Leslie E. Papke, 1989.
"Interstate Business Tax Differentials and New Firm Location: Evidence from Panel Data,"
NBER Working Papers
3184, National Bureau of Economic Research, Inc.
- Papke, Leslie E., 1991. "Interstate business tax differentials and new firm location : Evidence from panel data," Journal of Public Economics, Elsevier, Elsevier, vol. 45(1), pages 47-68, June.
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