Open Access. Powered by Scholars. Published by Universities.®
Articles 1 - 21 of 21
Full-Text Articles in Economics
The Long-Run Impacts Of Public Industrial Investment On Local Development And Economic Mobility: Evidence From World War Ii, Andrew Garin, Jonathan Rothbaum
The Long-Run Impacts Of Public Industrial Investment On Local Development And Economic Mobility: Evidence From World War Ii, Andrew Garin, Jonathan Rothbaum
Upjohn Institute Working Papers
This paper studies the long-run effects of government-led construction of manufacturing plants on the regions where they were built and on individuals from those regions. Specifically, we examine publicly financed plants built in dispersed locations outside of major urban centers for security reasons during the United States’ industrial mobilization for World War II. Wartime plant construction had large and persistent impacts on local development, characterized by an expansion of relatively high-wage manufacturing employment throughout the postwar era. These benefits were shared by incumbent residents; we find men born before WWII in counties where plants were built earned $1,200 (in 2020 …
Should Place-Based Jobs Policies Be Used To Help Distressed Communities?, Timothy J. Bartik
Should Place-Based Jobs Policies Be Used To Help Distressed Communities?, Timothy J. Bartik
Upjohn Institute Working Papers
Should policymakers seek to increase jobs in particular local labor markets? Yes, but only if these policies are well targeted and designed. Encouraging job growth in distressed places can cause persistent gains in employment-to-population ratios. But our current place-based jobs policies, under which state and local governments provide long-term tax incentives to megacorporations, are poorly targeted and designed. Such incentives are as large in nondistressed areas as in distressed areas, and they are excessively costly. What reforms are needed? First, job growth policies should target distressed areas. Second, tax incentives should be focused on high-multiplier businesses, such as high-tech firms. …
Local Job Multipliers In The United States: Variation With Local Characteristics And With High-Tech Shocks, Timothy J. Bartik, Nathan Sotherland
Local Job Multipliers In The United States: Variation With Local Characteristics And With High-Tech Shocks, Timothy J. Bartik, Nathan Sotherland
Upjohn Institute Working Papers
This paper provides new estimates of local job multipliers, the ratio of total jobs generated to some initial number of jobs created from a demand shock. Multipliers greatly affect benefits versus costs of local job-creation policies. These new estimates rely on improved methodology and data. The methodology better captures dynamic effects of demand shocks, specifies the model so that demand shocks are more comparable, and is more general in the types of demand shocks that are considered. The data has more industry detail than that used in previous studies. The local job multipliers estimated tend to be about one-quarter lower …
Striking A Balance: A National Assessment Of Economic Development Incentives, Mary Donegan, T. William Lester, Nichola Lowe
Striking A Balance: A National Assessment Of Economic Development Incentives, Mary Donegan, T. William Lester, Nichola Lowe
Upjohn Institute Working Papers
The use of incentive packages has intensified as local governments compete for new plants and corporate relocations, and as private firms increasingly demand a deal. While incentives promise jobs and tax revenue, scholars and practitioners criticize their high cost and limited accountability. Through a comparison of matched establishments, this paper explores how governmental incentive-granting strategy impacts incentive performance. We examine the overall impact of incentives and whether incentives granted to smaller firms perform better. Using economic development budget data, we also assess the state’s overall approach to economic development to determine which strategies are prioritized through funding. By showing that …
"But For" Percentages For Economic Development Incentives: What Percentage Estimates Are Plausible Based On The Research Literature?, Timothy J. Bartik
"But For" Percentages For Economic Development Incentives: What Percentage Estimates Are Plausible Based On The Research Literature?, Timothy J. Bartik
Upjohn Institute Working Papers
This paper reviews the research literature in the United States on effects of state and local “economic development incentives.” Such incentives are tax breaks or grants, provided by state or local governments to individual firms, that are intended to affect firms’ decisions about business location, expansion, or job retention. Incentives’ benefits versus costs depend greatly on what percentage of incented firms would not have made a particular location/expansion/retention decision “but for” the incentive. Based on a review of 34 estimates of “but for” percentages, from 30 different studies, this paper concludes that typical incentives probably tip somewhere between 2 percent …
New Evidence On State Fiscal Multipliers: Implications For State Policies, Timothy J. Bartik
New Evidence On State Fiscal Multipliers: Implications For State Policies, Timothy J. Bartik
Upjohn Institute Working Papers
When state and local governments engage in balanced budget changes in taxes and spending, what fiscal multiplier effects do such policies have on creating local jobs? Traditionally, the view has been that possible job-creation effects of such state and local “demand-side” policies are smaller, second-order effects. Such effects might be worthwhile to take into consideration when a state or local government balances its budget during a recession, but the effects were believed to be of modest magnitude, and not of major importance for more general state and local public policies. However, recent estimates of fiscal multiplier effects of state and …
Jobless Capital? The Role Of Capital Subsidies, Carlianne E. Patrick
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 …
State Incentives For Innovation, Star Scientists, And Jobs: Evidence From Biotech, Enrico Moretti, Daniel J. Wilson
State Incentives For Innovation, Star Scientists, And Jobs: Evidence From Biotech, Enrico Moretti, Daniel J. Wilson
Upjohn Institute Working Papers
We evaluate the effects of state-provided financial incentives for biotech companies, which are part of a growing trend of placed-based policies designed to spur innovation clusters. We estimate that the adoption of subsidies for biotech employers by a state raises the number of star biotech scientists in that state by about 15 percent over a three-year period. A 10 percent decline in the user cost of capital induced by an increase in R&D tax incentives raises the number of stars by 22 percent. Most of the gains are due to the relocation of star scientists to adopting states, with limited …
An Analysis Of The Employment Effects Of The Washington High Technology Business And Occupation (B&O) Tax Credit: Technical Report, Timothy J. Bartik, Kevin M. Hollenbeck
An Analysis Of The Employment Effects Of The Washington High Technology Business And Occupation (B&O) Tax Credit: Technical Report, Timothy J. Bartik, Kevin M. Hollenbeck
Upjohn Institute Working Papers
This paper estimates the effects of an R&D tax credit in the state of Washington on job creation. The research uses micro-data on the job creation and tax credits received by individual firms in the state of Washington from 2004 to 2009. We correct for the endogeneity of R&D tax credits received by individual firms by using instrumental variables based in part on national industry factor shares for R&D. We estimate that this tax credit created jobs, but at a high cost. The cost per job-year created is estimated to be between $40,000 and $50,000. The credit was so high …
Simulating The Effects Of Michigan's Mega Tax Credit Program On Job Creation And Fiscal Benefits, Timothy J. Bartik, George A. Erickcek
Simulating The Effects Of Michigan's Mega Tax Credit Program On Job Creation And Fiscal Benefits, Timothy J. Bartik, George A. Erickcek
Upjohn Institute Working Papers
This paper simulates job and fiscal impacts of Michigan’s MEGA tax credit program for job creation. Under plausible assumptions about how such credits affect business location decisions, the net costs per job created of the MEGA program are simulated to be of modest size. The job creation impacts of MEGA are simulated to be considerably larger than devoting similar dollar resources to general business tax cuts. The simulation methodology developed here is applicable to incentives in other states.
Mediating Incentive Use: A Time-Series Assessment Of Economic Development Deals In North Carolina, T. William Lester, Nichola Lowe, Allan Freyer
Mediating Incentive Use: A Time-Series Assessment Of Economic Development Deals In North Carolina, T. William Lester, Nichola Lowe, Allan Freyer
Upjohn Institute Working Papers
State incentive granting for the purpose of firm retention or recruitment remains highly controversial and is often portrayed as antithetical to long-range economic development planning. This paper uses quasi-experimental methods to measure the impact of state-level economic development incentives on employment growth at the establishment level in North Carolina. Using North Carolina’s rich history of strategic planning and sector-based economic development as a backdrop, we develop a theory of sectoral “mediation.” This enables us to compare the effectiveness of incentives offered in mediated and nonmediated industries and show that when incentives are coupled with sectoral economic development efforts they generate …
The Employment And Fiscal Effects Of Michigan's Mega Tax Credit Program, Timothy J. Bartik, George A. Erickcek
The Employment And Fiscal Effects Of Michigan's Mega Tax Credit Program, Timothy J. Bartik, George A. Erickcek
Upjohn Institute Working Papers
This paper estimates that Michigan's MEGA tax credit program to attract and retain businesses has large employment and fiscal benefits. MEGA provides discretionary tax credits to businesses, with the tax credit tied to the personal income taxes paid by employees on the new or retained jobs. We estimate the economic effects of MEGA using the Upjohn Institute's REMI model, and the research literature on how business location decisions respond to taxes. We estimate the fiscal effects of MEGA based on the research literature on how government spending and revenue respond to state personal income and population. The estimates suggest a …
What Should Michigan Be Doing To Promote Long-Run Economic Development?, Timothy J. Bartik
What Should Michigan Be Doing To Promote Long-Run Economic Development?, Timothy J. Bartik
Upjohn Institute Working Papers
This paper argues that Michigan can take cost-effective actions to significantly improve the primary state economic development goal: higher per capita income of Michigan's residents. Higher per capita income of Michigan's residents can be achieved through state policy actions that use cost-effective means to either lower the marginal costs of businesses that expand in the state, or boost the skills of state residents. In this paper, I offer eight ideas for how to lower marginal business costs and boost skills. Four of these ideas focus on lowering marginal business costs. Four other ideas focus on boosting skills. For each of …
Is There A Role For Public Support Of Incumbent Worker On-The-Job Training?, Kevin M. Hollenbeck
Is There A Role For Public Support Of Incumbent Worker On-The-Job Training?, Kevin M. Hollenbeck
Upjohn Institute Working Papers
States have begun to use training subsidies as a policy tool for employment retention and business competitiveness. This paper summarizes a survey of states concerning their investments in incumbent worker training. Altogether, states are investing about $550 to $800 million, which is perhaps one percent or less of total private sector training costs. The paper further discusses a study conducted for one state in which we found significant fiscal returns implying that underinvestment of public funds for incumbent worker training may be occurring. In this state, primary sector jobs were created or retained at a public cost of less than …
Incentive Solutions, Timothy J. Bartik
Incentive Solutions, Timothy J. Bartik
Upjohn Institute Working Papers
This paper reviews the research literature relevant to economic development incentives provided by state and local governments, and recommends reforms in these incentives. I argue that the main problem with current incentive policies is that state and local governments often provide incentives that are not in the best interest of that state or local area, for example that are excessively costly per job created, or that provide jobs that do not improve the job opportunities of local residents. I suggest that reforms should be "bottom-up" rather than "top-down." Regulation of incentives by the federal government, or by international trade treaties, …
Thoughts On American Manufacturing Decline And Revitalization, Timothy J. Bartik
Thoughts On American Manufacturing Decline And Revitalization, Timothy J. Bartik
Upjohn Institute Working Papers
The recent decline in American manufacturing probably reflects long-run problems. A sensible approach to revitalizing American manufacturing would focus on overcoming inefficiencies in the development of manufacturing, such as problems in small- and medium-sized manufacturers getting information about deploying new technologies. This approach to revitalizing manufacturing can best be implemented through federal efforts to encourage and support state and local economic development policies that help enhance manufacturing productivity. A decentralized approach to the revitalization of manufacturing encourages a variety of creative policies, is adaptable to local conditions, and is consistent with American political traditions.
Local Economic Development Policies, Timothy J. Bartik
Local Economic Development Policies, Timothy J. Bartik
Upjohn Institute Working Papers
This chapter seeks to provide useful advice for local government policy towards economic development programs. The chapter: reviews the size and scope of local economic development programs in the United States; critically analyzes the various rationales offered for these programs; makes recommendations for what local policy should do about business attraction and incentives, business retention, new business development, high technology development, brownfield development, distressed neighborhoods, and downtowns; and discusses how local economic development programs should be organized, managed, and evaluated.
The Role Of Partnerships In Economic Development And Labor Markets In The United States, Randall W. Eberts, George A. Erickcek
The Role Of Partnerships In Economic Development And Labor Markets In The United States, Randall W. Eberts, George A. Erickcek
Upjohn Institute Working Papers
This paper describes the role of local partnerships in the delivery of workforce and economic development services in the United States. Partnerships include both public and private organizations and increasingly depend upon local business people for leadership. With grassroots organizations traditionally taking the lead in addressing local issues and a long history of decentralized government, it is not surprising that a labyrinth of partnerships characterize the provision of public services. This paper grew out of a study tour that the Upjohn Institute conducted in conjunction with the Local Employment and Economic Development (LEED) Committee of the Organization for Economic Co-Operation …
Alternative Measures Of State Ui Systems, Christopher J. O'Leary, Robert Tannenwald, Wei-Jang Huang, Pei Zhu
Alternative Measures Of State Ui Systems, Christopher J. O'Leary, Robert Tannenwald, Wei-Jang Huang, Pei Zhu
Upjohn Institute Working Papers
Comparisons among state unemployment insurance (UI) systems can be misleading. Frequently quoted indicators of benefit generosity, tax cost, and adherence to the experience-rating principle are influenced by the relative economic conditions of states. Such comparisons thereby obscure underlying structural differences in state UI systems. A business considering alternative states in which to locate a production facility should be cautious when interpreting UI information in an economic developer's marketing pitch. This paper offers alternative indicators based on how representative firms, with a well specified unemployment experience, would fare in different states. The authors use a micro-simulation approach to model the experiences …
Economic Development Strategies, Timothy J. Bartik
Economic Development Strategies, Timothy J. Bartik
Upjohn Institute Working Papers
This paper provides a guide to economic development policies for local government managers. Local economic development policies today include not only tax subsidies for branch plants, but also job training to provide workers to businesses, advice and support services for potential entrepreneurs, and extension services to help businesses modernize and export. To help local government managers, this paper suggests a number of guiding principles, including: local economic development should be pursued cooperatively across the local labor market; economic development programs should consider the quality of jobs created; tax subsidies are expensive per job created; development subsidies are more effective if …
Federal Policy Towards State And Local Economic Development In The 1990s, Timothy J. Bartik
Federal Policy Towards State And Local Economic Development In The 1990s, Timothy J. Bartik
Upjohn Institute Working Papers
This paper suggests new federal policies towards state and local economic development assistance to business. I argue that there is some evidence that these programs can be effective in encouraging business growth and helping the unemployed. But state and local governments do not have the right incentives to adequately pursue national goals through economic development programs. State and local governments are not inclined to do quality evaluations of their programs and tend to favor business attraction programs over programs that might increase U.S. business productivity. In addition, it is unclear whether economic development efforts are most vigorously pursued by economically …