Advanced Search
MyIDEAS: Login to save this paper or follow this series

A Long-Term Evaluation of the First Generation of the French Urban Enterprise Zones


Author Info

  • Corentin Trevien
  • Pauline Givord
  • Simon Quantin


This paper provides new empirical evidence on the long-run efficiency of locally targeted tax incentives in revitalizing distressed areas. We focus on the first generation of the French “Enterprise Zone†(EZ) initiative, implemented in 1997 in continental France. This program provides tax incentives to firms located in designated areas plagued by social and economic difficulties. Compared to EZs in the US and the UK, French Enterprise Zones offer generous tax reductions, but these subsidies are limited to small firms with less than fifty employees. To our knowledge, the first generation of French EZs has not yet been evaluated on a national scale. A very rich georeferenced panel dataset is used to identify the impact of the EZ policy. Our identification strategy relies on the selection mechanism employed by the French government: designated EZs were selected according to a deprivation index based on various socio-economic criteria. Besides, in order to qualify as an EZ, an urban area must have a population of over 10,000. Consequently, a pool of deprived urban areas was left untreated because of this threshold whereas it was similar to selected areas in terms of economic development. We use two different empirical methods: a combination of regression and sub-classification on the propensity score, and a regression discontinuity design method. Both methods yield similar results. We highlight a strong positive impact of this policy on employment and business location during the first years of the policy. Detailed estimates moderate this initial favourable assessment. First, the EZ effect is partially offset after the initial five-year period of full tax exemptions by more frequent business discontinuations. We simulate actual tax reliefs at a firm-level at the beginning of the policy and ten years after in order to explain this waning effect. We highlight the fact that the introduction of generous payroll tax deductions at a national scale in 2003 reduced the attractiveness of targeted areas. Second, while firms already operating also benefit from tax exemptions, no significant impact on their employment level can be detected. Besides, this policy promotes sectors of activity that weakly stimulate local employment and development. Overall, these results suggest that firms are sensitive to tax cuts but call into question the capacity of EZs to improve local economy. Keywords: Enterprise Zones, Local Employment, Propensity Score Matching, Evaluation. JEL: C23, H71, R5

Download Info

If 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.
File URL:
Download Restriction: no

Bibliographic Info

Paper provided by European Regional Science Association in its series ERSA conference papers with number ersa12p776.

as in new window
Date of creation: Oct 2012
Date of revision:
Handle: RePEc:wiw:wiwrsa:ersa12p776

Contact details of provider:
Postal: Welthandelsplatz 1, 1020 Vienna, Austria
Web page:

Related research


Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:


References listed on IDEAS
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.:
as in new window
  1. Roland Rathelot & Patrick Sillard, 2008. "The Importance of Local Corporate Taxes in Business Location Decisions: Evidence From French Micro Data," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 118(527), pages 499-514, 03.
  2. Guido Imbens & Thomas Lemieux, 2007. "Regression Discontinuity Designs: A Guide to Practice," NBER Technical Working Papers, National Bureau of Economic Research, Inc 0337, National Bureau of Economic Research, Inc.
  3. Jed Kolko & David Neumark, 2009. "Do Some Enterprise Zones Create Jobs?," NBER Working Papers 15206, National Bureau of Economic Research, Inc.
  4. Givord, Pauline & Rathelot, Roland & Sillard, Patrick, 2013. "Place-based tax exemptions and displacement effects: An evaluation of the Zones Franches Urbaines program," Regional Science and Urban Economics, Elsevier, Elsevier, vol. 43(1), pages 151-163.
  5. Heckman, James J & Ichimura, Hidehiko & Todd, Petra, 1998. "Matching as an Econometric Evaluation Estimator," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 65(2), pages 261-94, April.
  6. 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.
  7. Battistin, Erich & Rettore, Enrico, 2008. "Ineligibles and eligible non-participants as a double comparison group in regression-discontinuity designs," Journal of Econometrics, Elsevier, Elsevier, vol. 142(2), pages 715-730, February.
  8. Hahn, Jinyong & Todd, Petra & Van der Klaauw, Wilbert, 2001. "Identification and Estimation of Treatment Effects with a Regression-Discontinuity Design," Econometrica, Econometric Society, Econometric Society, vol. 69(1), pages 201-09, January.
  9. Matias Busso & Patrick Kline, 2008. "Do Local Economic Development Programs Work? Evidence from the Federal Empowerment Zone Program," Cowles Foundation Discussion Papers, Cowles Foundation for Research in Economics, Yale University 1639, Cowles Foundation for Research in Economics, Yale University.
  10. Gobillon, Laurent & Magnac, Thierry & Selod, Harris, 2010. "Do Unemployed Workers Benefit from Enterprise Zones? The French Experience," CEPR Discussion Papers, C.E.P.R. Discussion Papers 8084, C.E.P.R. Discussion Papers.
  11. 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, Elsevier, vol. 37(1), pages 121-136, January.
  12. Andrew Hanson & Shawn Rohlin, 2011. "The Effect of Location-Based Tax Incentives on Establishment Location and Employment across Industry Sectors," Public Finance Review, , , vol. 39(2), pages 195-225, March.
Full references (including those not matched with items on IDEAS)


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

Cited by:
  1. Augusto Cerqua & Guido Pellegrini, 2013. "Beyond the SUTVA: how industrial policy evaluations change when we allow for interaction among firms," ERSA conference papers, European Regional Science Association ersa13p340, European Regional Science Association.
  2. Augusto Cerqua & Guido Pellegrini, 2014. "Beyond the SUTVA: how policy evaluations change when we allow for interactions among firms," Working Papers, Sapienza University of Rome, DISS 2/14, Sapienza University of Rome, DISS.
  3. Behaghel, Luc & Lorenceau, Adrien & Quantin, Simon, 2013. "Replacing churches and mason lodges? Tax exemptions and rural development," CEPREMAP Working Papers (Docweb), CEPREMAP 1308, CEPREMAP.
  4. Briant, Anthony & Lafourcade, Miren & Schmutz, Benoît, 2013. "Can Tax Breaks Beat Geography? Lessons from the French Enterprise Zone Experience," CEPREMAP Working Papers (Docweb), CEPREMAP 1316, CEPREMAP.
  5. Luc Behaghel & Adrien Lorenceau & Simon Quantin, 2012. "Tax exemptions and rural development: Evidence from a quasi-experiment," PSE Working Papers, HAL halshs-00728195, HAL.
  6. Givord, Pauline & Rathelot, Roland & Sillard, Patrick, 2013. "Place-based tax exemptions and displacement effects: An evaluation of the Zones Franches Urbaines program," Regional Science and Urban Economics, Elsevier, Elsevier, vol. 43(1), pages 151-163.
  7. Mayneris, F. & Py, L., 2014. "The efficiency of enterprise zone programs: some conflicting results?," Working papers, Banque de France 474, Banque de France.
  8. Cerqua, Augusto & Pellegrini, Guido, 2014. "Do subsidies to private capital boost firms' growth? A multiple regression discontinuity design approach," Journal of Public Economics, Elsevier, Elsevier, vol. 109(C), pages 114-126.
  9. repec:hal:wpaper:halshs-00728195 is not listed on IDEAS


This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.


Access and download statistics


When requesting a correction, please mention this item's handle: RePEc:wiw:wiwrsa:ersa12p776. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Gunther Maier).

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 references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.