IDEAS home Printed from
   My bibliography  Save this article

Tax Costs and Employment Benefits of Enterprise Zones


  • Kala Seetharam Sridhar

    (Ohio State University)


This article answers a challenge raised against traditional economic development policy; recent research has shown that such policies, far from being zero sum, have positive-sum effects. The article examines these questions: Are the local benefits of tax incentives greater than the costs? Specifically, are benefits greatest in high-unemployment areas because of low reservation wages? If so, do such policies produce net benefits for a region, even if they redistribute jobs? To answer these questions, reservation wages are estimated as a function of unemployment. Net benefits and costs from new and relocated jobs are compared. The results indicate that overall local benefits are greater than the local costs of providing tax incentives. However untargeted provision of incentives is not recommended, even in high-unemployment areas. The article provides an alternative approach toward traditional policies and demonstrates that such policies do produce net benefits for the locality adopting them.

Suggested Citation

  • Kala Seetharam Sridhar, 1996. "Tax Costs and Employment Benefits of Enterprise Zones," Economic Development Quarterly, , vol. 10(1), pages 69-90, February.
  • Handle: RePEc:sae:ecdequ:v:10:y:1996:i:1:p:69-90

    Download full text from publisher

    File URL:
    Download Restriction: no


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

    Cited by:

    1. Felsenstein, Daniel & Fleischer, Aliza, 1999. "Capital Assistance and Small Firm Growth: Implications for Regional Economic Welfare," ERSA conference papers ersa99pa395, European Regional Science Association.
    2. repec:ind:nipfwp:19 is not listed on IDEAS
    3. repec:npf:wpaper:19 is not listed on IDEAS
    4. Donald Haurin & Kala Sridhar, 2003. "The impact of local unemployment rates on reservation wages and the duration of search for a job," Applied Economics, Taylor & Francis Journals, vol. 35(13), pages 1469-1476.
    5. Richard E. Kaglic & William A. Testa, 1999. "Slow work force growth: a challenge for the Midwest?," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q II, pages 31-46.
    6. repec:ind:nipfwp:04 is not listed on IDEAS
    7. 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.
    8. repec:npf:wpaper:04 is not listed on IDEAS
    9. Daniel Felsenstein & Aliza Fleischer & Adi Sidi, 1998. "Market failure and the estimation of subsidy size in a regional entrepreneurship programme," Entrepreneurship & Regional Development, Taylor & Francis Journals, vol. 10(2), pages 151-165, January.
    10. Seetharam Sridhar, Kala, 2001. "Benefits and Costs of Regional Development: Evidence from Ohio's Enterprise Zone Program," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 31(2).

    More about this item


    Access and download statistics


    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:sae:ecdequ:v:10:y:1996:i:1:p:69-90. 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: (SAGE Publications). General contact details of provider: .

    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.

    We have no references for this item. You can help adding them by using 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.