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Does Increasing Available Non-Tax Economic Development Incentives Result in More Jobs?

Carlianne Patrick

National Tax Journal, 2014, vol. 67, issue 2, 351-386

Abstract: This paper examines the job creation effects of state and local non-tax incentives for capital investment, which are relatively understudied in the literature. The paper’s primary contribution is the creation of an Incentive Environment Index (IEI) from state constitutional provisions that limit and structure the ability of state and local governmental entities to aid private enterprises. Comparing estimation results across methods reveals that unobserved heterogeneity results in overstatement of policy effects. The most robust estimates indicate that increasing the ability of governments to aid private enterprise has a signifcant negative medium-term effect on rural county employment levels but otherwise has no effect on employment levels or growth.

Date: 2014
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