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Do Tax Incentives Affect Local Economic Growth? What Mean Impacts Miss in the Analysis of Enterprise Zone Policies

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  • Daniele Bondonio

Abstract

Geographically-targeted tax incentives remain popular initiatives in response to deteriorating economic conditions of urban and industrial areas. This paper exploits the exogenous variations of the U.S. state Enterprise Zone programs to estimate the impact of various incentive features on a number of dimensions of local economic growth. The econometric analysis uses plant level data to sort out growth outcomes into gross flows separately accounted for by new, existing, and vanishing businesses in the target areas. Results offer empirical evidence to support a number of specific policy recommendations and show that the impact of the incentives has more complex dynamics than those revealed by the null mean impact estimates obtained from analyzing net growth outcomes.

Suggested Citation

  • Daniele Bondonio, 2003. "Do Tax Incentives Affect Local Economic Growth? What Mean Impacts Miss in the Analysis of Enterprise Zone Policies," Working Papers 03-17, Center for Economic Studies, U.S. Census Bureau.
  • Handle: RePEc:cen:wpaper:03-17
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    References listed on IDEAS

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    Cited by:

    1. Matias Busso & Patrick Kline, 2008. "Do Local Economic Development Programs Work? Evidence from the Federal Empowerment Zone Program," Cowles Foundation Discussion Papers 1639, Cowles Foundation for Research in Economics, Yale University.
    2. Rachel Meltzer & Jenny Schuetz, 2010. "Bodegas or Bagel Shops? Neighborhood Differences in Retail & Household Services," Working Paper 33, USC Lusk Center for Real Estate.
    3. Thierry MAYER & Florian MAYNERIS & Loriane PY, 2012. "The Impact of Urban Enterprise Zones on Establishments' Location Decisions: Evidence from French ZFUs," LIDAM Discussion Papers IRES 2012019, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    4. Rachel Meltzer & Jenny Schuetz, 2012. "Bodegas or Bagel Shops? Neighborhood Differences in Retail and Household Services," Economic Development Quarterly, , vol. 26(1), pages 73-94, February.
    5. Cizkowicz, Piotr & Cizkowicz-Pekala, Magda & Pekala, Piotr & Rzonca, Andrzej, 2015. "The Effects of Polish Special Economic Zones on Employment and Investment: Spatial Panel Modelling Perspective," MPRA Paper 63176, University Library of Munich, Germany.
    6. Matias Busso & Jesse Gregory & Patrick Kline, 2013. "Assessing the Incidence and Efficiency of a Prominent Place Based Policy," American Economic Review, American Economic Association, vol. 103(2), pages 897-947, April.
    7. Zenou, Yves, 2011. "Spatial versus Social Mismatch: The Strength of Weak Ties," IZA Discussion Papers 5507, Institute of Labor Economics (IZA).
    8. Piotr Ciżkowicz & Magda Ciżkowicz-Pękała & Piotr Pękała & Andrzej Rzońca, 2017. "The effects of special economic zones on employment and investment: a spatial panel modeling perspective," Journal of Economic Geography, Oxford University Press, vol. 17(3), pages 571-605.

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    More about this item

    Keywords

    Tax incentives; Local economic growth; Enterprise Zones; Program evaluation;
    All these keywords.

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • R5 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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