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The impact of Urban Enterprise Zones on establishment location decisions: Evidence from French ZFUs

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  • Mayer,T.
  • Mayneris, F.
  • Py, L.

Abstract

In this paper, we study the impact of a French enterprise zones program -- the``Zones Franches Urbaines'' (ZFUs) policy-- on establishment location decisions. Our empirical analysis is based on an micro-geographic dataset that provides exhaustive information on the location of establishments in France over the period 2002-2007 at the census block level. Our identification strategy, which combines spatial and time differencing, assesses how the probability that an establishment locates in the ZFU area rather than in the non-ZFU area of a municipality changes after the implementation of the policy. We also implement double difference estimations, using the fact that targeted urban areas have been selected in different waves over time. Finally, we exploit a discontinuity in the eligibility criteria of the policy as an exogenous source of variation to estimate the impact of the treatment. We find that conditioning on locating in a municipality that hosts a ZFU, the policy has a positive and sizable impact on the probability to locate in the ZFU part rather than in the non-ZFU part of municipalities. However the impact is highly heterogeneous across zones, industries and firms. Moreover, we show that the policy mostly generates diversion effects within municipalities.

Suggested Citation

  • Mayer,T. & Mayneris, F. & Py, L., 2013. "The impact of Urban Enterprise Zones on establishment location decisions: Evidence from French ZFUs," Working papers 458, Banque de France.
  • Handle: RePEc:bfr:banfra:458
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    Cited by:

    1. Gibbons, Steve & Overman, Henry G. & Patacchini, Eleonora, 2015. "Spatial Methods," Handbook of Regional and Urban Economics, Elsevier.
    2. Redding, Stephen J. & Turner, Matthew A., 2015. "Transportation Costs and the Spatial Organization of Economic Activity," Handbook of Regional and Urban Economics, Elsevier.
    3. Jofre-Monseny, Jordi, 2014. "The effects of unemployment protection on migration in lagging regions," Journal of Urban Economics, Elsevier, vol. 83(C), pages 73-86.
    4. Kristian Behrens, 2013. "Strength in Numbers? The Weak Effect of Manufacturing Clusters on Canadian Productivity," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 377, April.
    5. González-Pampillón, Nicolás & Jofre-Monseny, Jordi & Viladecans-Marsal, Elisabet, 2016. "Can Urban Renewal Policies Reverse Neighborhood Ethnic Dynamics?," CEPR Discussion Papers 11676, C.E.P.R. Discussion Papers.
    6. Criscuolo, Chiara & Martin, Ralf & Overman, Henry & Van Reenen, John, 2012. "The Causal Effects of an Industrial Policy," IZA Discussion Papers 6323, Institute for the Study of Labor (IZA).
    7. Neumark, David & Simpson, Helen, 2015. "Place-Based Policies," Handbook of Regional and Urban Economics, Elsevier.
    8. Hans R.A. Koster & Jos van Ommeren, 2017. "Place-based policies and the housing market," Tinbergen Institute Discussion Papers 17-008/VIII, Tinbergen Institute.
    9. Felix, R. Alison & Hines, James R., 2013. "Who offers tax-based business development incentives?," Journal of Urban Economics, Elsevier, vol. 75(C), pages 80-91.
    10. Pauline Charnoz, 2014. "French enterprise zone program : did it help the residents of deprived neighborhoods ?," ERSA conference papers ersa14p1465, European Regional Science Association.
    11. Anthony Briant & Miren Lafourcade & Benoît Schmutz, 2015. "Can Tax Breaks Beat Geography? Lessons from the French Enterprise Zone Experience," American Economic Journal: Economic Policy, American Economic Association, vol. 7(2), pages 88-124, May.
    12. Faggio, G., 2016. "Relocation of Public Sector Workers: Evaluating a place-based policy," Working Papers 16/10, Department of Economics, City University London.
    13. 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.
    14. Chabé-Ferret, Sylvain, 2015. "Analysis of the bias of Matching and Difference-in-Difference under alternative earnings and selection processes," Journal of Econometrics, Elsevier, vol. 185(1), pages 110-123.
    15. repec:gam:jsusta:v:10:y:2018:i:1:p:45-:d:125112 is not listed on IDEAS
    16. Giulia Faggio, 2014. "Relocation of Public Sector Workers: Evaluating a Place-based Policy," SERC Discussion Papers 0155, Spatial Economics Research Centre, LSE.
    17. repec:eee:pubeco:v:156:y:2017:i:c:p:101-120 is not listed on IDEAS
    18. 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.
    19. Anthony Briant & Miren Lafourcade & Benoît Schmutz, 2012. "Can Tax Breaks Beat Geography? Lessons from the French Enterprise Zone Experience," Working Papers halshs-00695225, HAL.
    20. Balázs Égert & Antoine Goujard, 2014. "Strengthening Competition in Poland," OECD Economics Department Working Papers 1125, OECD Publishing.
    21. 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.

    More about this item

    Keywords

    Firm Location; Enterprise zones; Spatial and Time Differencing.;

    JEL classification:

    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy
    • R5 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis

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