IDEAS home Printed from https://ideas.repec.org/p/upj/weupjo/04-99.html
   My bibliography  Save this paper

Incentive Solutions

Author

Listed:

Abstract

This 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.

Suggested Citation

  • Timothy J. Bartik, 2004. "Incentive Solutions," Upjohn Working Papers 04-99, W.E. Upjohn Institute for Employment Research.
    • Handle: RePEc:upj:weupjo:04-99
    Note: A revised version of this paper titled "Solving the Problems of Economic Development Incentives" appears in Growth and Change, 36(2), Spring 2005.
    as

    Download full text from publisher

    File URL: http://research.upjohn.org/cgi/viewcontent.cgi?article=1116&context=up_workingpapers
    Download Restriction: This material is copyrighted. Permission is required to reproduce any or all parts.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. 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.
    2. 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.
    3. Timothy J. Bartik, 1996. "Eight issues for policy toward economic development incentives," The Region, Federal Reserve Bank of Minneapolis, vol. 10(Jun), pages 43-46.
    4. Timothy J. Bartik, "undated". "What Should the Federal Government Be Doing About Urban Economic Development?," Upjohn Working Papers tjb1994c, W.E. Upjohn Institute for Employment Research.
    5. 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.
    6. Alan H. Peters & Peter S. Fisher, 2002. "State Enterprise Zone Programs: Have They Worked?," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number sezp, August.
    7. 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.
    8. William H. Oakland & William A. Testa, 1996. "State-local business taxation and the benefits principle," Economic Perspectives, Federal Reserve Bank of Chicago, vol. 20(Jan), pages 2-19.
    9. Charles S. Colgan, 1995. "Brave New World: International Regulation of Subsidies and the Future of State and Local Economic Development Programs," Economic Development Quarterly, , vol. 9(2), pages 107-118, May.
    10. 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.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mark Drabenstott, 2006. "Rethinking federal policy for regional economic development," Economic Review, Federal Reserve Bank of Kansas City, vol. 91(Q I), pages 115-142.

    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. Timothy J. Bartik, 2007. "Solving the Problems of Economic Development Incentives," Book chapters authored by Upjohn Institute researchers, in: Ann Markusen (ed.), Reining in the Competition for Capital, chapter 5, pages 103-139, W.E. Upjohn Institute for Employment Research.
    2. Timothy J. Bartik, 2004. "Evaluating the Impacts of Local Economic Development Policies on Local Economic Outcomes: What Has Been Done and What Is Doable?," Book chapters authored by Upjohn Institute researchers, in: Evaluating Local Economic and Employment Development: How to Access Waht Works Among Programmes and Policies, pages 113-142, W.E. Upjohn Institute for Employment Research.
    3. Timothy J. Bartik, 2003. "Local Economic Development Policies," Upjohn Working Papers 03-91, W.E. Upjohn Institute for Employment Research.
    4. 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, May.
    5. Carlianne Patrick, 2014. "Does Increasing Available Non-Tax Economic Development Incentives Result in More Jobs?," National Tax Journal, National Tax Association;National Tax Journal, vol. 67(2), pages 351-386, June.
    6. Moretti, Enrico, 2011. "Local Labor Markets," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 14, pages 1237-1313, Elsevier.
    7. Richard Funderburg & Timothy J. Bartik & Alan H. Peters & Peter S. Fisher, 2013. "The Impact Of Marginal Business Taxes On State Manufacturing," Journal of Regional Science, Wiley Blackwell, vol. 53(4), pages 557-582, October.
    8. Jasper Beekmans & Huub Ploegmakers & Karel Martens & Erwin van der Krabben, 2016. "Countering decline of industrial sites: Do local economic development policies target the neediest places?," Urban Studies, Urban Studies Journal Limited, vol. 53(14), pages 3027-3047, November.
    9. Anna Alberini, 2007. "Determinants And Effects On Property Values Of Participation In Voluntary Cleanup Programs: The Case Of Colorado," Contemporary Economic Policy, Western Economic Association International, vol. 25(3), pages 415-432, July.
    10. Paolo Rosato & Anna Alberini & Valentina Zanatta & Margaretha Breil, 2009. "Redeveloping Derelict and Underused Historical City Areas: Evidence from a Survey�of�Real�Estate�Developers," Working Papers 2009_02, Department of Economics, University of Venice "Ca' Foscari".
    11. Timothy J. Bartik & Kevin Hollenbeck, 2012. "An Analysis of the Employment Effects of the Washington High Technology Business and Occupation (B&O) Tax Credit," Upjohn Working Papers 12-187, W.E. Upjohn Institute for Employment Research.
    12. Robert C. Turner & Mark K. Cassell, 2007. "When Do States Pursue Targeted Economic Development Policies? The Adoption and Expansion of State Enterprise Zone Programs," Social Science Quarterly, Southwestern Social Science Association, vol. 88(1), pages 86-103, March.
    13. Timothy J. Bartik, 2012. "The Future of State and Local Economic Development Policy: What Research Is Needed," Growth and Change, Wiley Blackwell, vol. 43(4), pages 545-562, December.
    14. Anna Alberini & Dennis Guignet, 2008. "Voluntary Cleanups and Redevelopment Potential: Lessons from Baltimore, Maryland," Working Papers 2008.87, Fondazione Eni Enrico Mattei.
    15. Kris Wernstedt & Peter B. Meyer & Anna Alberini, 2006. "Attracting private investment to contaminated properties: The value of public interventions," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 25(2), pages 247-369.
    16. Timothy J. Bartik & George A. Erickcek, 2012. "Simulating the Effects of Michigan's MEGA Tax Credit Program on Job Creation and Fiscal Benefits," Upjohn Working Papers 12-185, W.E. Upjohn Institute for Employment Research.
    17. Jeffrey Thompson, 2010. "Prioritizing Approaches to Economic Development in New England: Skills, Infrastructure, and Tax Incentives," Published Studies priorities_september7_per, Political Economy Research Institute, University of Massachusetts at Amherst.
    18. Michael J. Hicks & Michael LaFaive, 2011. "The Influence of Targeted Economic Development Tax Incentives on County Economic Growth: Evidence From Michigan’s MEGA Credits," Economic Development Quarterly, , vol. 25(2), pages 193-205, May.
    19. William Spelman, 2006. "Growth, Stability, and the Urban Portfolio," Economic Development Quarterly, , vol. 20(4), pages 299-316, November.
    20. Stephan F. Gohmann & Bradley K. Hobbs & Myra McCrickard, 2008. "Economic Freedom and Service Industry Growth in the United States," Entrepreneurship Theory and Practice, , vol. 32(5), pages 855-874, September.

    More about this item

    Keywords

    economic; development; incentives; local; regional; Bartik; solutions;
    All these keywords.

    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

    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:upj:weupjo:04-99. 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: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/upjohus.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.