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Tax Incentive Programs and Unemployment Rate

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  • Sridhar, Kala Seetharam

    (Indian Institute of Management, Prabandh Nagar, Lucknow, India)

Abstract

This paper answers the question: What are the effects of tax incentive programs on an area's unemployment rate? A model is developed that describes the determination of unemployment in an enterprise zone. The estimation of unemployment rate using Census data for Ohio, taking into account the treatment effects problem, shows that such programs have a significant impact in reducing unemployment. The net impact of being an enterprise zone for a duration of one year is approximately a 3 percentage point reduction in area unemployment. The results also suggest that three to five years could be the optimum period for offering incentives.

Suggested Citation

  • Sridhar, Kala Seetharam, 2000. "Tax Incentive Programs and Unemployment Rate," The Review of Regional Studies, Southern Regional Science Association, vol. 30(3), pages 275-298, Winter.
  • Handle: RePEc:rre:publsh:v:30:y:2000:i:3:p:275-298
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    References listed on IDEAS

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    1. Harry J. Holzer, 1986. "Reservation Wages and Their Labor Market Effects for Black and White Male Youth," Journal of Human Resources, University of Wisconsin Press, vol. 21(2), pages 157-177.
    2. Papke, Leslie E., 1994. "Tax policy and urban development : Evidence from the Indiana enterprise zone program," Journal of Public Economics, Elsevier, vol. 54(1), pages 37-49, May.
    3. Boarnet, Marlon G. & Bogart, William T., 1996. "Enterprise Zones and Employment: Evidence from New Jersey," Journal of Urban Economics, Elsevier, vol. 40(2), pages 198-215, September.
    4. Feldstein, Martin S, 1978. "The Private and Social Costs of Unemployment," American Economic Review, American Economic Association, vol. 68(2), pages 155-158, May.
    5. Timothy J. Bartik, 1995. "Economic Development Strategies," Upjohn Working Papers and Journal Articles 95-33, W.E. Upjohn Institute for Employment Research.
    6. Kala Seetharam Sridhar, 1996. "Tax Costs and Employment Benefits of Enterprise Zones," Economic Development Quarterly, , vol. 10(1), pages 69-90, February.
    7. Mary K. Marvel & William J. Shkurti, 1993. "The Economic Impact of Development: Honda in Ohio," Economic Development Quarterly, , vol. 7(1), pages 50-62, February.
    8. Tobin, James, 1972. "Inflation and Unemployment," American Economic Review, American Economic Association, vol. 62(1), pages 1-18, March.
    9. Courant, Paul N., 1994. "How Would You Know a Good Economic Policy if You Tripped Over One? Hint: Don't Just Count Jobs," National Tax Journal, National Tax Association;National Tax Journal, vol. 47(4), pages 863-881, December.
    10. Pantuosco, Lou & Parker, Darrell, 1998. "Sources of Prevailing Differences in Unemployment Rates For Selected Regional Pairs," The Review of Regional Studies, Southern Regional Science Association, vol. 28(2), pages 35-46, Fall.
    11. Ham, John C & LaLonde, Robert J, 1996. "The Effect of Sample Selection and Initial Conditions in Duration Models: Evidence from Experimental Data on Training," Econometrica, Econometric Society, vol. 64(1), pages 175-205, January.
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    Cited by:

    1. repec:ind:nipfwp:19 is not listed on IDEAS
    2. repec:npf:wpaper:19 is not listed on IDEAS
    3. Sridhar, Kala Seetharam, 2004. "Impact of growth centres on unemployment and firm location: Evidence from India," Working Papers 04/4, National Institute of Public Finance and Policy.
    4. Landers, Jim, 2006. "Why Don't Enterprise Zones Work? Estimates of the Extent that EZ Benefits are Capitalized into Property Values," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 0(Issue 1), pages 1-16.

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