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Can Tax Breaks Beat Geography? Lessons from the French Enterprise Zone Experience

  • Briant, Anthony
  • Lafourcade, Miren
  • Schmutz, Benoît

This paper demonstrates that geography matters to the effectiveness of place-based policies, using the French enterprise zone program as a case study. Using a series of indicators of spatial isolation for treated and non treated neighborhoods, we show that geographical heterogeneity determines the ability of the program to impact firms’ settlements, job creation and earnings. In particular, whereas a focus on the average impact of the program would lead to the conclusion that it mostly succeeded in displacing pre-existing firms, a lower level of spatial isolation was a clear determinant of the decision to create new firms from scratch.

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Paper provided by CEPREMAP in its series CEPREMAP Working Papers (Docweb) with number 1316.

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Length: 44 pages
Date of creation: Dec 2013
Date of revision:
Handle: RePEc:cpm:docweb:1316
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  1. Jed Kolko & David Neumark, 2009. "Do Some Enterprise Zones Create Jobs?," NBER Working Papers 15206, National Bureau of Economic Research, Inc.
  2. Angus Deaton, 2010. "Instruments, randomization, and learning about development," Working Papers 1224, Princeton University, Woodrow Wilson School of Public and International Affairs, Research Program in Development Studies..
  3. Wang, Jin, 2013. "The economic impact of Special Economic Zones: Evidence from Chinese municipalities," Journal of Development Economics, Elsevier, vol. 101(C), pages 133-147.
  4. Eleonora Patacchini & Yves Zenou, 2007. "Spatial dependence in local unemployment rates," Journal of Economic Geography, Oxford University Press, vol. 7(2), pages 169-191, March.
  5. Patrick Kline & Enrico Moretti, 2013. "Place Based Policies with Unemployment," American Economic Review, American Economic Association, vol. 103(3), pages 238-43, May.
  6. Anthony Briant & Miren Lafourcade & Benoît Schmutz, 2012. "Can Tax Breaks Beat Geography? Lessons from the French Enterprise Zone Experience," PSE Working Papers halshs-00695225, HAL.
  7. Gobillon, Laurent & Magnac, Thierry & Selod, Harris, 2010. "Do unemployed workers benefit from enterprise zones? The French experience," TSE Working Papers 10-201, Toulouse School of Economics (TSE).
  8. Ham, John C. & Swenson, Charles & İmrohoroğlu, Ayşe & Song, Heonjae, 2011. "Government programs can improve local labor markets: Evidence from State Enterprise Zones, Federal Empowerment Zones and Federal Enterprise Community," Journal of Public Economics, Elsevier, vol. 95(7), pages 779-797.
  9. Bondonio, Daniele & Engberg, John, 2000. "Enterprise zones and local employment: evidence from the states' programs," Regional Science and Urban Economics, Elsevier, vol. 30(5), pages 519-549, September.
  10. 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.
  11. Pauline Givord & Roland Rathelot & Patrick Sillard, 2011. "Place-based Tax Exemptions and Displacement Effects : An Evaluation of the Zones Franches Urbaines Program," Working Papers 2011-19, Centre de Recherche en Economie et Statistique.
  12. Bondonio, Daniele & Greenbaum, Robert T., 2007. "Do local tax incentives affect economic growth? What mean impacts miss in the analysis of enterprise zone policies," Regional Science and Urban Economics, Elsevier, vol. 37(1), pages 121-136, January.
  13. P. Givord & S. Quantin & C. Trevien, 2012. "A Long-Term Evaluation of the First Generation of the French Urban Enterprise Zones," Documents de Travail de la DESE - Working Papers of the DESE g2012-01, Institut National de la Statistique et des Etudes Economiques, DESE.
  14. Matias Busso & Jesse Gregory & Patrick Kline, 2011. "Assessing the Incidence and Efficiency of a Prominent Place Based Policy," Working Papers 11-07, Center for Economic Studies, U.S. Census Bureau.
  15. Matthew Freedman, 2013. "Targeted Business Incentives and Local Labor Markets," Journal of Human Resources, University of Wisconsin Press, vol. 48(2), pages 311-344.
  16. Edward L. Glaeser & Joshua D. Gottlieb, 2008. "The Economics of Place-Making Policies," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 39(1 (Spring), pages 155-253.
  17. Landers, Jim, 2006. "Why Don't Enterprise Zones Work? Estimates of the Extent that EZ Benefits are Capitalized into Property Values," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 36(1).
  18. Neumark, David & Kolko, Jed, 2010. "Do enterprise zones create jobs? Evidence from California's enterprise zone program," Journal of Urban Economics, Elsevier, vol. 68(1), pages 1-19, July.
  19. Patrick Kline, 2010. "Place Based Policies, Heterogeneity, and Agglomeration," American Economic Review, American Economic Association, vol. 100(2), pages 383-87, May.
  20. Freedman, Matthew, 2012. "Teaching new markets old tricks: The effects of subsidized investment on low-income neighborhoods," Journal of Public Economics, Elsevier, vol. 96(11), pages 1000-1014.
  21. Roland Rathelot & Patrick Sillard, 2008. "Zones Franches Urbaines : quels effets sur l'emploi salarié et les créations d'établissements ?," Économie et Statistique, Programme National Persée, vol. 415(1), pages 81-96.
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