AbstractThis paper reviews the research literature relevant to economic development incentives provided by state and local governments, and recommends reforms in these incentives. I argue that the main problem with current incentive policies is that state and local governments often provide incentives that are not in the best interest of that state or local area, for example that are excessively costly per job created, or that provide jobs that do not improve the job opportunities of local residents. I suggest that reforms should be "bottom-up" rather than "top-down." Regulation of incentives by the federal government, or by international trade treaties, may prevent both desirable and undesirable incentives. "Bottom-up" reforms would include more information on incentive offers, a budget constraint on the volume of incentives, stronger standards for job quality, accessibility, and performance in incentives, and better benefit-cost analyses of incentives.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by W.E. Upjohn Institute for Employment Research in its series Upjohn Working Papers and Journal Articles with number 04-99.
Date of creation: Feb 2004
Date of revision:
Note: A revised version of this paper titled "Solving the Problems of Economic Development Incentives" appears in Growth and Change, 36(2), Spring 2005.
Contact details of provider:
Postal: 300 S. Westnedge Ave. Kalamazoo, MI 49007 USA
Web page: http://www.upjohn.org
More information through EDIRC
economic; development; incentives; local; regional; Bartik; solutions;
Find related papers by JEL classification:
- R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy
- R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy
- H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-06-27 (All new papers)
- NEP-GEO-2004-06-27 (Economic Geography)
- NEP-PBE-2004-06-27 (Public Economics)
- NEP-URE-2004-06-27 (Urban & Real Estate Economics)
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.:
- Timothy J. Bartik, 1996. "Eight issues for policy toward economic development incentives," The Region, Federal Reserve Bank of Minneapolis, issue Jun, pages 43-46.
- Alan H. Peters, 1993. "Clawbacks and the Administration of Economic Development Policy in the Midwest," Economic Development Quarterly, , vol. 7(4), pages 328-340, November.
- Andrew Haughwout & Robert Inman & Steven Craig & Thomas Luce, 2004.
"Local Revenue Hills: Evidence from Four U.S. Cities,"
The Review of Economics and Statistics,
MIT Press, vol. 86(2), pages 570-585, May.
- Andrew F. Haughwout & Robert P. Inman & Steven Craig & Thomas Luce, 2003. "Local Revenue Hills: Evidence from Four U.S. Cities," NBER Working Papers 9686, National Bureau of Economic Research, Inc.
- Andrew Haughwout & Robert Inman & Steven G. Craig & Thomas Luce, 2000. "Local Revenue Hills: Evidence from Four U. S. Cities," PIER Working Paper Archive 03-012, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 01 Mar 2003.
- Timothy J. Bartik & Peter K. Eisinger & George A. Erickcek, 2003. "Economic Development Policy in Michigan," Book chapters authored by Upjohn Institute researchers, in: Charles L. Ballard & Paul N. courant & Douglas C. Drake & Ronald C. Fisher & Elisabeth R. Gerber (ed.), Michigan at the Millennium: A Benchmark and Analysis of Its Fiscal and Economic Structure, pages 279-297 W.E. Upjohn Institute for Employment Research.
- William H. Oakland & William A. Testa, 1996. "State-local business taxation and the benefits principle," Economic Perspectives, Federal Reserve Bank of Chicago, issue Jan, pages 2-19.
- Paul Osterman & Rosemary Batt, 1993. "Employer-centered training for international competitiveness: Lessons from state programs," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 12(3), pages 456-477.
- Timothy J. Bartik, .
"What Should the Federal Government Be Doing About Urban Economic Development?,"
Upjohn Working Papers and Journal Articles
tjb1994c, W.E. Upjohn Institute for Employment Research.
- Timothy J. Bartik, 1994. "What Should the Federal Government Be Doing About Urban Economic Development?," Upjohn Working Papers and Journal Articles 94-25, W.E. Upjohn Institute for Employment Research.
- Michael Wasylenko, 1997. "Taxation and economic development: the state of the economic literature," New England Economic Review, Federal Reserve Bank of Boston, issue Mar, pages 37-52.
- Mark Drabenstott, 2006. "Rethinking federal policy for regional economic development," Economic Review, Federal Reserve Bank of Kansas City, issue Q I, pages 115-142.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.