Location-based tax incentives: Evidence from India
Ritam Chaurey
Journal of Public Economics, 2017, vol. 156, issue C, 101-120
Abstract:
While policies targeting particular geographic regions are widely used by governments, there have been few rigorous evaluations of their causal impacts. In this paper, I study the impact of a location-based tax incentive scheme in India. Using aggregated and firm-level panel data, I find large increases in employment, total output, fixed capital, and the number of firms as a result of the program. These increases are due to both the growth of existing firms as well as the entry of new firms. There is supporting evidence that the new firms entering the treated regions are larger and more productive. I find no evidence for relocation of firms or spillovers in industrial activity between treatment and control areas. Finally, using data from household surveys, I show that wages of workers rise but find no changes in housing rents or migration across the treated and control regions. My results therefore suggest that the policy increased welfare, and I also conclude that the policy was cost-effective. This provides support for “place-based” policies to correct for regional economic disparities, especially in settings with low labor mobility.
Keywords: Development; Place-based policies; Industrial policy; Firms; India (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (33)
Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S004727271630113X
Full text for ScienceDirect subscribers only
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:eee:pubeco:v:156:y:2017:i:c:p:101-120
DOI: 10.1016/j.jpubeco.2016.08.013
Access Statistics for this article
Journal of Public Economics is currently edited by R. Boadway and J. Poterba
More articles in Journal of Public Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().