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The Effect of Location-Based Tax Incentives on Establishment Location and Employment across Industry Sectors

Author

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  • Andrew Hanson

    (Department of Economics, Georgia State University, Atlanta, GA, USA, ahanson@gsu.edu)

  • Shawn Rohlin

    (Department of Economics, University of Akron, Akron, OH, USA)

Abstract

This article examines the potential for location-based employment tax incentives to have a differential effect on establishment location and employment across industry sectors. The authors model the differential effect of the location-based federal Empowerment Zone (EZ) wage tax credit on equilibrium labor and total cost savings across industry sectors. The model guides the empirical work, as the authors test the effect of the program across industry sectors. The empirical analysis shows that location-based tax incentives have a positive effect on firm location in some of the industries their model predicts and a negative effect in industries that could be crowded out.

Suggested Citation

  • 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.
  • Handle: RePEc:sae:pubfin:v:39:y:2011:i:2:p:195-225
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Elias Einiö & Henry G. Overman, 2016. "The (Displacement) Effects of Spatially Targeted Enterprise Initiatives: Evidence from UK LEGI," SERC Discussion Papers 0191, Spatial Economics Research Centre, LSE.
    2. Patrick, Carlianne, 2016. "Jobless capital? The role of capital subsidies," Regional Science and Urban Economics, Elsevier, vol. 60(C), pages 169-179.
    3. Shelley M. Kimelberg & Elizabeth Williams, 2013. "Evaluating the Importance of Business Location Factors: The Influence of Facility Type," Growth and Change, Wiley Blackwell, vol. 44(1), pages 92-117, March.
    4. Rahman, Aminur, 2014. "Investment climate reforms and job creation in developing countries : what do we know and what should we do ?," Policy Research Working Paper Series 7025, The World Bank.
    5. World Bank Group, 2017. "Investment Policy and Promotion Diagnostics and Tools," World Bank Other Operational Studies 28281, The World Bank.
    6. Reynolds, C. Lockwood & Rohlin, Shawn M., 2015. "The effects of location-based tax policies on the distribution of household income: Evidence from the federal Empowerment Zone program," Journal of Urban Economics, Elsevier, vol. 88(C), pages 1-15.
    7. Corentin Trevien & Pauline Givord & Simon Quantin, 2012. "A Long-Term Evaluation of the First Generation of the French Urban Enterprise Zones," ERSA conference papers ersa12p776, European Regional Science Association.
    8. Baum-Snow, Nathaniel & Ferreira, Fernando, 2015. "Causal Inference in Urban and Regional Economics," Handbook of Regional and Urban Economics, Elsevier.
    9. Hanson, Andrew & Rohlin, Shawn, 2013. "Do spatially targeted redevelopment programs spillover?," Regional Science and Urban Economics, Elsevier, vol. 43(1), pages 86-100.

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