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Not Just Another Determinants Piece: Path Dependency and Local Tax Abatements

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  • Laura A. Reese

Abstract

Although there is a large body of research attempting to identify the correlates of tax abatements, the question of why cities abate taxes at widely differing rates-or indeed, not at all despite state enabling legislation allowing them-has never been completely answered. Based on an examination of tax abatement data representing the history of abatements in Michigan, the article concludes that abatement patterns can be best understood when past abatement behaviors and the nature of the local employment base are included in the analysis. In the case of the number of abatements granted, it appears that both these forces-along with the general economy, governmental structural and process factors-are important in understanding abatement behavior. When the total value of abatements is considered, industrial mix appears most critical. Once municipalities start giving tax abatements they continue to do so. And, having concentrations of transportation-related industries and food/consumer products are traits that appear to lead to that initial push for abatements. Copyright 2006 by The Policy Studies Organization.

Suggested Citation

  • Laura A. Reese, 2006. "Not Just Another Determinants Piece: Path Dependency and Local Tax Abatements," Review of Policy Research, Policy Studies Organization, vol. 23(2), pages 491-504, March.
  • Handle: RePEc:bla:revpol:v:23:y:2006:i:2:p:491-504
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    Cited by:

    1. Jeanty, P. Wilner & Ulimwengu, John Mususa, 2011. "Poverty rate and government income transfers: A spatial simultaneous equations approach," IFPRI discussion papers 1076, International Food Policy Research Institute (IFPRI).
    2. Michael R. Betz & Mark D. Partridge & David S. Kraybill & Linda Lobao, 2012. "Why Do Localities Provide Economic Development Incentives? Geographic Competition, Political Constituencies, and Government Capacity," Growth and Change, Wiley Blackwell, vol. 43(3), pages 361-391, September.
    3. repec:bap:journl:170407 is not listed on IDEAS
    4. Maria Figueroa-Armijos & Thomas G. Johnson, 2016. "Entrepreneurship policy and economic growth: Solution or delusion? Evidence from a state initiative," Small Business Economics, Springer, vol. 47(4), pages 1033-1047, December.
    5. Robert T. Greenbaum & Blair D. Russell & Tricia L. Petras, 2010. "Measuring the Distribution of Economic Development Tax Incentive Intensity," Economic Development Quarterly, , vol. 24(2), pages 154-168, May.
    6. Levin-Waldman, Oren M., 2009. "Urban path dependency theory and the living wage: Were cities that passed ordinances destined to do so?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 38(4), pages 672-683, August.

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