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Place-based tax exemptions and displacement effects: An evaluation of the Zones Franches Urbaines program

Author

Listed:
  • P. GIVORD

    (Insee)

  • R. RATHELOT

    (Insee-Crest)

  • P. SILLARD

    (Insee)

Abstract

We propose to evaluate the impact of the French Zones Franches Urbaines on economic activity. This public-funded place-based program, comparable to US enterprise zones, exempts new and existing firms from taxes for a period of at least 5 years. For the purpose of this evaluation, we merged several administrative datasets at the firm level. This allows us to exhaustively observe business creations and stocks, as well as employment and financial outcomes for each firm at a precise geographical level. We focus on the second wave of the program, during which treated territories were selected among a pool of deprived territories according to a known set of covariates. The way treatment was assigned makes the conditional independence assumption credible in our case. Overall, we find significant effects on business creation and on employment while the effect on firms that were located in the treated areas before the program is not significant, regardless of the outcome. Finally, we provide evidence of significant negative spillovers of the program on neighboring areas.

Suggested Citation

  • P. Givord & R. Rathelot & P. Sillard, 2011. "Place-based tax exemptions and displacement effects: An evaluation of the Zones Franches Urbaines program," Documents de Travail de l'Insee - INSEE Working Papers g2011-13, Institut National de la Statistique et des Etudes Economiques.
    • Handle: RePEc:nse:doctra:g2011-13
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    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy

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