Open Access. Powered by Scholars. Published by Universities.®

Social and Behavioral Sciences Commons

Open Access. Powered by Scholars. Published by Universities.®

Regional Economics

PDF

W.E. Upjohn Institute for Employment Research

Upjohn Institute Working Papers

2015

Capital labor substitution

Articles 1 - 1 of 1

Full-Text Articles in Social and Behavioral Sciences

Jobless Capital? The Role Of Capital Subsidies, Carlianne E. Patrick Oct 2015

Jobless Capital? The Role Of Capital Subsidies, Carlianne E. Patrick

Upjohn Institute Working Papers

Using tax abatements, financial incentives, and public investments to attract (or retain) firms is the primary economic development tool for many local governments. Often local job creation policies focus on increasing capital through grants, low-interest financing, and other economic development incentives. Theory predicts that capital subsidies induce firm behaviors that limit their job creation effects. This paper employs the Incentives Environment Index, constructed from state constitutional provisions that limit and structure the ability of state and local governmental entities to aid private enterprises, and five-year county panels to test theoretical predictions on county capital expenditure and input mixes as well …