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Place-based programs and the geographic dispersion of employment

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  • Freedman, Matthew

Abstract

Government efforts to improve local economic conditions by encouraging private investment in targeted communities could affect the broader geographic distribution of employment in a region, especially to the extent that subsidized businesses face few constraints on whom they hire. This paper examines the labor market impacts of investment subsidized by the U.S. federal government's New Markets Tax Credit (NMTC) program, which provides tax incentives to promote business investment in low-income neighborhoods. To identify the program's effects, I exploit a discontinuity in the rule determining the eligibility of census tracts for NMTC-subsidized investment. Using rich administrative data on workers' residence and workplace locations, I find evidence that many of the new jobs created in areas that receive subsidized investment do not go to residents of targeted neighborhoods. The results suggest that the local economic benefits of place-based programs may be diluted when subsidized businesses have scope to hire from broader regional labor markets.

Suggested Citation

  • Freedman, Matthew, 2015. "Place-based programs and the geographic dispersion of employment," Regional Science and Urban Economics, Elsevier, vol. 53(C), pages 1-19.
    • Handle: RePEc:eee:regeco:v:53:y:2015:i:c:p:1-19
    DOI: 10.1016/j.regsciurbeco.2015.04.002
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    More about this item

    Keywords

    Place-based programs; Business incentives; Tax credits; Commuting; Low-income neighborhoods; Regression discontinuity;
    All these keywords.

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy

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