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Incidence and Substitution in Enterprise Zone Programs: The Case of Colorado

Author

Listed:
  • Devon Lynch

    (Department of Economics, University of Massachusetts Dartmouth, North Dartmouth, MA, USA)

  • Jeffrey S. Zax

    (Department of Economics, University of Colorado at Boulder, Boulder, CO, USA, zax@colorado.edu)

Abstract

Among 53,334 urban Colorado establishments, geographic information systems (GIS) techniques identify those that are and are not in enterprise zones (EZs). EZs have no effect on payroll per worker. Therefore, subsidy incidence is not on labor. Urban EZs do not increase employment per establishment, implying that subsidies induce net substitution effects for capital that counteract scale effects on labor. Rural EZs increase employment in the smallest of 13,278 establishments, implying that capital is less substitutable for labor with rural production functions and subsidy mixes. Employment effects differ across EZs. Equilibrium incidence of subsidies is probably on immobile factors such as commercial real estate.

Suggested Citation

  • Devon Lynch & Jeffrey S. Zax, 2011. "Incidence and Substitution in Enterprise Zone Programs: The Case of Colorado," Public Finance Review, , vol. 39(2), pages 226-255, March.
  • Handle: RePEc:sae:pubfin:v:39:y:2011:i:2:p:226-255
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    Citations

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    Cited by:

    1. Mayer, Thierry & Mayneris, Florian & Py, Loriane, 2012. "The Impact of Urban Enterprise Zones on Establishments' Location Decisions: Evidence from French ZFUs," CEPR Discussion Papers 9074, C.E.P.R. Discussion Papers.
    2. Christopher Coyne & Lotta Moberg, 2015. "The political economy of state-provided targeted benefits," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 28(3), pages 337-356, September.
    3. Thierry Mayer & Florian Mayneris & Loriane Py, 2017. "The impact of Urban Enterprise Zones on establishment location decisions and labor market outcomes: evidence from France," Journal of Economic Geography, Oxford University Press, vol. 17(4), pages 709-752.
    4. Felipe Berrutti, 2016. "Subsidios a la oferta y decisiones de localización: El caso de la Ley de Vivienda de Interés Social," Documentos de Investigación Estudiantil (students working papers) 16-02, Instituto de Economía - IECON.
    5. Neumark, David & Simpson, Helen, 2015. "Place-Based Policies," Handbook of Regional and Urban Economics, Elsevier.
    6. Tong, Patricia & Zhou, Li, 2014. "The Impact of Place-Based Employment Tax Credits on Local Labor: Evidence from Tax Data," Working Papers 2014-6, University of Alberta, Department of Economics.
    7. Florian MAYNERIS & Loriane PY, 2013. "The Efficiency Of Enterprise Zone Programs Some Conflicting Results?," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 38, pages 209-224.
    8. Monica Andini & Guido de Blasio, 2013. "Local development that money can�t buy: Italy�s Contratti di Programma," Temi di discussione (Economic working papers) 915, Bank of Italy, Economic Research and International Relations Area.
    9. Zheng, Guo & Barbieri, Elisa & Di Tommaso, Marco R. & Zhang, Lei, 2016. "Development zones and local economic growth: zooming in on the Chinese case," China Economic Review, Elsevier, vol. 38(C), pages 238-249.

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