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Did incentives help municipalities recover from the Great Recession? Evidence from Midwestern cities

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  • Joshua Drucker
  • Geon Kim
  • Rachel Weber

Abstract

This study assesses the impacts of local business incentives in the largest urban areas of Illinois, Michigan, and Wisconsin, three Midwestern states that share similar histories and settings. We assembled a unique dataset combining information on two types of incentives, tax increment financing districts and tax abatements, together with socio‐economic, geographic, fiscal, and spatial competitive characteristics for all of the municipalities in six metropolitan areas. The outcome measures include employment growth, establishment formation, and business relocation. The analysis extends knowledge of the effects of economic development incentives in two ways. First, we improve upon previous research by incorporating key factors in municipal decisions to offer incentives. Second, we add to limited empirical evidence concerning local incentives following the Great Recession. Variation in the use of incentives reflects not only local decision‐making but also differing fiscal capacities and situations of adaptation to adverse economic conditions, with some governments pulling back on incentives and others initiating new approaches to retain or lure businesses.

Suggested Citation

  • Joshua Drucker & Geon Kim & Rachel Weber, 2019. "Did incentives help municipalities recover from the Great Recession? Evidence from Midwestern cities," Growth and Change, Wiley Blackwell, vol. 50(3), pages 894-925, September.
    • Handle: RePEc:bla:growch:v:50:y:2019:i:3:p:894-925
    DOI: 10.1111/grow.12318
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    Cited by:

    1. Joanna Ganning, 2023. "Quantifying the impacts of suburbanization without growth on central city housing vacancy," Growth and Change, Wiley Blackwell, vol. 54(4), pages 1002-1018, December.
    2. Zeballos, Eliana & Marchesi, Keenan, 2022. "Comparing Food Sector Employment Headcount and Sales Data in the National Establishment Time Series Database to Federal Data," USDA Miscellaneous 329070, United States Department of Agriculture.
    3. Geon Kim, 2024. "Assessing the Effects of Place-Based Policy on Spatial Inequality and the Distribution of Household Income: Evidence from Tax Increment Financing," Economic Development Quarterly, , vol. 38(2), pages 82-99, May.
    4. Marchesi, Keenan & Byrne, Anne & Malone, Trey, 2023. "The Rural Food-Away-From-Home Landscape, 1990-2019," USDA Miscellaneous 335420, United States Department of Agriculture.

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