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The Impact of Urban Enterprise Zones on Establishments' Location Decisions: Evidence from French ZFUs

Author

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  • Thierry MAYER

    (Sciences-Po, CEPII, CEPR)

  • Florian MAYNERIS

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) and Center for Operations Research and Econometrics (CORE))

  • Loriane PY

    (Banque de France)

Abstract

In this paper, we study the impact of a French enterprise zones program the "Zones Franches Urbaines" (ZFUs) policy on establishments' location decisions. Our empirical analysis is based on a micro-geographic dataset which provides exhaustive information on the location of establishments in France over the period 2000-2007 at the census block level. We use a difference in difference approach combining spatial and time differencing. We also do triple 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. Our results show that the French ZFU policy has a positive and sizable impact on location choices. However, we also find that the policy mostly generates displacement effects, in particular through relocation of firms from the un-treated to the treated part within municipalities. Finally, the impact is shown to be highly heterogeneous across zones, firms and industries. The overall cost of moving establishments within municipalities is relatively high.

Suggested Citation

  • 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).
  • Handle: RePEc:ctl:louvir:2012019
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    1. Denis Anne, 2019. "Aides à la mobilité et insertion sociale," Erudite Ph.D Dissertations, Erudite, number ph19-03 edited by Yannick L'Horty, November.
    2. 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.
    3. Felipe Berrutti, 2016. "Subsidios a la oferta y decisiones de localización: El caso de la Ley de Vivienda de Interés Social," Documentos de Investigacion Estudiantil (students working papers) 16-02, Instituto de Economia - IECON.
    4. Pauline Charnoz, 2014. "French enterprise zone program : did it help the residents of deprived neighborhoods ?," ERSA conference papers ersa14p1465, European Regional Science Association.
    5. Criscuolo, Chiara & Martin, Ralf & Overman, Henry & Van Reenen, John, 2012. "The Causal Effects of an Industrial Policy," IZA Discussion Papers 6323, Institute of Labor Economics (IZA).
    6. 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.
    7. Neumark, David & Simpson, Helen, 2015. "Place-Based Policies," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 1197-1287, Elsevier.
    8. Gibbons, Steve & Overman, Henry G. & Patacchini, Eleonora, 2015. "Spatial Methods," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 115-168, Elsevier.
    9. Faggio, Giulia, 2019. "Relocation of public sector workers: Evaluating a place-based policy," Journal of Urban Economics, Elsevier, vol. 111(C), pages 53-75.
    10. 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.
    11. 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.
    12. 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.
    13. Chaurey, Ritam & Le, Duong Trung, 2018. "Infrastructure Grants and the Performance of Microenterprises," IZA Discussion Papers 11749, Institute of Labor Economics (IZA).
    14. Hooton, Christopher Alex, 2019. "The application of micro-geographic economic analysis in urban policy evaluation," Evaluation and Program Planning, Elsevier, vol. 72(C), pages 125-135.
    15. Redding, Stephen J. & Turner, Matthew A., 2015. "Transportation Costs and the Spatial Organization of Economic Activity," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 1339-1398, Elsevier.
    16. Maximilian v. Ehrlich & Henry G. Overman, 2020. "Place-Based Policies and Spatial Disparities across European Cities," Journal of Economic Perspectives, American Economic Association, vol. 34(3), pages 128-149, Summer.
    17. 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.
    18. Hans R. A. Koster & Jos van Ommeren, 2019. "Place-Based Policies and the Housing Market," The Review of Economics and Statistics, MIT Press, vol. 101(3), pages 400-414, July.
    19. 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.
    20. Piotr Ciżkowicz & Magda Ciżkowicz-Pękała & Piotr Pękała & Andrzej Rzońca, . "Why Do Some Special Economic Zones Attract More Firms Than Others? Panel Data Analysis of Polish Special Economic Zones," Prague Economic Papers, Prague University of Economics and Business, vol. 0.
    21. Bin Wu & Xuefei Xu & Zhenzhong Feng, 2018. "Investment Promotion, Fiscal Competition and Economic Growth Sustainability," Sustainability, MDPI, Open Access Journal, vol. 10(1), pages 1-12, January.
    22. 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.
    23. Chaurey, Ritam, 2017. "Location-based tax incentives: Evidence from India," Journal of Public Economics, Elsevier, vol. 156(C), pages 101-120.
    24. Balázs Égert & Antoine Goujard, 2014. "Strengthening Competition in Poland," OECD Economics Department Working Papers 1125, OECD Publishing.
    25. Piotr Ciżkowicz & Magda Ciżkowicz-Pękała & Piotr Pękała & Andrzej Rzońca, 2021. "Why do Some Special Economic Zones Attract More Firms than Others? Panel Data Analysis of Polish Special Economic Zones," Prague Economic Papers, Prague University of Economics and Business, vol. 2021(1), pages 61-89.

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    More about this item

    Keywords

    firm location; enterprise zones; spatial differencing;
    All these keywords.

    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
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy

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