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Fiscal Zoning, Sales Taxes, and Employment: Do Higher Sales Taxes Lead to More Jobs in Retailing and Fewer Jobs in Manufacturing?

Author

Listed:
  • Burnes, Daria

    (University of California, Irvine)

  • Neumark, David

    (University of California, Irvine)

  • White, Michelle J.

    (University of California, San Diego)

Abstract

We test the hypothesis that local government officials in jurisdictions that have higher local sales taxes are more likely to use fiscal zoning to attract retailing. We find that total retail employment is not significantly affected by local sales tax rates, but employment in big box and anchor stores is higher significantly in jurisdictions with higher sales tax rates. This suggests that local officials in jurisdictions with higher sales tax rates concentrate on attracting large stores and shopping centers. We also find that the effect of local sales taxes on big box and anchor store retail employment is larger in county interiors, where residents tend to be captive to local retailers. Finally, fiscal zoning has the opposite effect on manufacturing employment, suggesting that local officials' efforts to attract shopping centers and large stores crowd out manufacturing.

Suggested Citation

  • Burnes, Daria & Neumark, David & White, Michelle J., 2012. "Fiscal Zoning, Sales Taxes, and Employment: Do Higher Sales Taxes Lead to More Jobs in Retailing and Fewer Jobs in Manufacturing?," IZA Discussion Papers 6383, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp6383
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    References listed on IDEAS

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    Cited by:

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    2. Saxon, Nicholas & Tosun, Mehmet S. & Yang, Jingjing, 2015. "State and Local Sales Taxes and Business Activity in the United States," IZA Discussion Papers 9413, Institute of Labor Economics (IZA).
    3. Ehrlich, Maximilian V. & Hilber, Christian A.L. & Schöni, Olivier, 2018. "Institutional settings and urban sprawl: Evidence from Europe," Journal of Housing Economics, Elsevier, vol. 42(C), pages 4-18.
    4. Gian-Claudia Sciara, 2017. "Metropolitan Transportation Planning: Lessons From the Past, Institutions for the Future," Journal of the American Planning Association, Taylor & Francis Journals, vol. 83(3), pages 262-276, July.

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    More about this item

    Keywords

    fiscal zoning; sales taxes; retail employment; manufacturing employment;
    All these keywords.

    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location
    • R5 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

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