Do Place-Based Tax Incentives Create Jobs? PDF Download
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Author: Hyejin Ku
Publisher:
ISBN:
Category :
Languages : en
Pages :
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In this paper, we evaluate the effectiveness of place-based payroll taxes in stimulating local employment by exploiting a unique policy setting in Norway, where a system of geographically differentiated payroll taxes was suddenly abolished due to an EU regulation. The reform was enforced independently of the regional labor market developments, creating arguably exogenous variation in the payroll tax rates that firms in different local labor markets faced over time. We find evidence of partial shifting of payroll tax increases on to worker wages as well as a significant decline in local employment. These findings suggest that in settings with some degrees of wage rigidity, place-based payroll tax incentives can be effective in stimulating local employment.
Author: Hyejin Ku
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
In this paper, we evaluate the effectiveness of place-based payroll taxes in stimulating local employment by exploiting a unique policy setting in Norway, where a system of geographically differentiated payroll taxes was suddenly abolished due to an EU regulation. The reform was enforced independently of the regional labor market developments, creating arguably exogenous variation in the payroll tax rates that firms in different local labor markets faced over time. We find evidence of partial shifting of payroll tax increases on to worker wages as well as a significant decline in local employment. These findings suggest that in settings with some degrees of wage rigidity, place-based payroll tax incentives can be effective in stimulating local employment.
Author: Timothy J. Bartik
Publisher: W.E. Upjohn Institute
ISBN: 0880996684
Category : Political Science
Languages : en
Pages : 180
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Book Description
Bartik provides a clear and concise overview of how state and local governments employ economic development incentives in order to lure companies to set up shop—and provide new jobs—in needy local labor markets. He shows that many such incentive offers are wasteful and he provides guidance, based on decades of research, on how to improve these programs.
Author: Timothy J. Bartik
Publisher: Russell Sage Foundation
ISBN: 1610440285
Category : Business & Economics
Languages : en
Pages : 486
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Book Description
Even as the United States enjoys a booming economy and historically low levels of unemployment, millions of Americans remain out of work or underemployed, and joblessness continues to plague many urban communities, racial minorities, and people with little education. In Jobs for the Poor, Timothy Bartik calls for a dramatic shift in the way the United States confronts this problem. Today, most efforts to address this problem focus on ways to make workers more employable, such as job training and welfare reform. But Bartik argues that the United States should put more emphasis on ways to increase the interest of employers in creating jobs for the poor—or the labor demand side of the labor market. Bartik's bases his case for labor demand policies on a comprehensive review of the low-wage labor market. He examines the effectiveness of government interventions in the labor market, such as Welfare Reform, the Earned Income Tax Credit, and Welfare-to-Work programs, and asks if having a job makes a person more employable. Bartik finds that public service employment and targeted employer wage subsidies can increase employment among the poor. In turn, job experience significantly increases the poor's long-run earnings by enhancing their skills and reputation with employers. And labor demand policies can avoid causing inflation or displacing other workers by targeting high-unemployment labor markets and persons who would otherwise be unemployed. Bartik concludes by proposing a large-scale labor demand program. One component of the program would give a tax credit to employers in areas of high unemployment. To provide disadvantaged workers with more targeted help, Bartik also recommends offering short-term subsidies to employers—particularly small businesses and nonprofit organizations—that hire people who otherwise would be unlikely to find jobs. With experience from subsidized jobs, the new workers should find it easier to obtain future year-round employment. Although these efforts would not catapult poor families into the middle class overnight, Bartik offers a powerful argument that having a full-time worker in every household would help improve the lives of millions. Jobs for the Poor makes a compelling case that full employment can be achieved if the country has the political will and adopts policies that address both sides of the labor market. Copublished with the W. E. Upjohn Institute for Economic Research
Author: Daphne A. Kenyon
Publisher:
ISBN: 9781558442337
Category : Electronic books
Languages : en
Pages : 0
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Book Description
The use of property tax incentives for business by local governments throughout the United States has escalated over the last 50 years. While there is little evidence that these tax incentives are an effective instrument to promote economic development, they cost state and local governments $5 to $10 billion each year in forgone revenue. Three major obstacles can impede the success of property tax incentives as an economic development tool. First, incentives are unlikely to have a significant impact on a firm's profitability since property taxes are a small part of the total costs for most businesses--averaging much less than 1 percent of total costs for the U.S. manufacturing sector. Second, tax breaks are sometimes given to businesses that would have chosen the same location even without the incentives. When this happens, property tax incentives merely deplete the tax base without promoting economic development. Third, widespread use of incentives within a metropolitan area reduces their effectiveness, because when firms can obtain similar tax breaks in most jurisdictions, incentives are less likely to affect business location decisions. This report reviews five types of property tax incentives and examines their characteristics, costs, and effectiveness: property tax abatement programs; tax increment finance; enterprise zones; firm-specific property tax incentives; and property tax exemptions in connection with issuance of industrial development bonds. Alternatives to tax incentives should be considered by policy makers, such as customized job training, labor market intermediaries, and business support services. State and local governments also can pursue a policy of broad-based taxes with low tax rates or adopt split-rate property taxation with lower taxes on buildings than land.State policy makers are in a good position to increase the effectiveness of property tax incentives since they control how local governments use them. For example, states can restrict the use of incentives to certain geographic areas or certain types of facilities; publish information on the use of property tax incentives; conduct studies on their effectiveness; and reduce destructive local tax competition by not reimbursing local governments for revenue they forgo when they award property tax incentives.Local government officials can make wiser use of property tax incentives for business and avoid such incentives when their costs exceed their benefits. Localities should set clear criteria for the types of projects eligible for incentives; limit tax breaks to mobile facilities that export goods or services out of the region; involve tax administrators and other stakeholders in decisions to grant incentives; cooperate on economic development with other jurisdictions in the area; and be clear from the outset that not all businesses that ask for an incentive will receive one.Despite a generally poor record in promoting economic development, property tax incentives continue to be used. The goal is laudable: attracting new businesses to a jurisdiction can increase income or employment, expand the tax base, and revitalize distressed urban areas. In a best case scenario, attracting a large facility can increase worker productivity and draw related firms to the area, creating a positive feedback loop. This report offers recommendations to improve the odds of achieving these economic development goals.
Author: Matthew Freedman
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
Government efforts to improve local economic conditions by encouraging private investment in targeted communities could affect the broader geographic distribution of employment in a region, especially to the extent that subsidized businesses face few constraints on whom they hire. This paper examines the labor market impacts of investment subsidized by the U.S. federal government's New Markets Tax Credit (NMTC) program, which provides tax incentives to promote business investment in low-income neighborhoods. To identify the program's effects, I exploit a discontinuity in the rule determining the eligibility of census tracts for NMTC-subsidized investment. Using rich administrative data on workers' residence and workplace locations, I find evidence that many of the new jobs created in areas that receive subsidized investment do not go to residents of targeted neighborhoods. The results suggest that the local economic benefits of place-based programs may be diluted when subsidized businesses have scope to hire from broader regional labor markets.
Author: Sean Safford
Publisher: Harvard University Press
ISBN: 0674266951
Category : Social Science
Languages : en
Pages : 128
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Book Description
In this book, Sean Safford compares the recent history of Allentown, Pennsylvania, with that of Youngstown, Ohio. Allentown has seen a noticeable rebound over the course of the past twenty years. Facing a collapse of its steel-making firms, its economy has reinvented itself by transforming existing companies, building an entrepreneurial sector, and attracting inward investment. Youngstown was similar to Allentown in its industrial history, the composition of its labor force, and other important variables, and yet instead of adapting in the face of acute economic crisis, it fell into a mean race to the bottom.Challenging various theoretical perspectives on regional socioeconomic change, Why the Garden Club Couldn’t Save Youngstown argues that the structure of social networks among the cities’ economic, political, and civic leaders account for the divergent trajectories of post-industrial regions. It offers a probing historical explanation for the decline, fall, and unlikely rejuvenation of the Rust Belt. Emphasizing the power of social networks to shape action, determine access to and control over information and resources, define the contexts in which problems are viewed, and enable collective action in the face of externally generated crises, this book points toward present-day policy prescriptions for the ongoing plight of mature industrial regions in the U.S. and abroad.
Author: Nathan M. Jensen
Publisher: Cambridge University Press
ISBN: 1108311423
Category : Political Science
Languages : en
Pages : 271
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Book Description
Policies targeting individual companies for economic development incentives, such as tax holidays and abatements, are generally seen as inefficient, economically costly, and distortionary. Despite this evidence, politicians still choose to use these policies to claim credit for attracting investment. Thus, while fiscal incentives are economically inefficient, they pose an effective pandering strategy for politicians. Using original surveys of voters in the United States, Canada and the United Kingdom, as well as data on incentive use by politicians in the US, Vietnam and Russia, this book provides compelling evidence for the use of fiscal incentives for political gain and shows how such pandering appears to be associated with growing economic inequality. As national and subnational governments surrender valuable tax revenue to attract businesses in the vain hope of long-term economic growth, they are left with fiscal shortfalls that have been filled through regressive sales taxes, police fines and penalties, and cuts to public education.
Author: Timothy J. Bartik
Publisher:
ISBN:
Category : Competition
Languages : en
Pages : 59
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Book Description
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. Third, officials can more effectively promote local job creation by relying less on tax incentives and more on public services. These include customized business services, infrastructure, land development policies, local education, and job training. The federal government can use taxes and intergovernmental grants to discourage city or state officials from giving excessive state and local incentives to the largest firms. The federal government can also provide block grants to state and local governments to provide services that promote job growth in distressed places.
Author: Ben Cherniavsky
Publisher:
ISBN:
Category : Employment tax credit
Languages : en
Pages : 40
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Book Description
This paper provides a selective survey of literature from the last two decades on Canadian tax incentives for employment creation and for recruitment from specific population groups. With reference to the US experience.
Author: United States. Employment and Training Administration
Publisher:
ISBN:
Category : Employment tax credit
Languages : en
Pages : 3
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