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Development impact fees and employment

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  • Burge, Gregory
  • Ihlanfeldt, Keith

Abstract

Development impact fees have sparked considerable controversy as they have spread rapidly in usage throughout the United States. One contentious issue is the effect that these fees have on local economic development. While some scholars have argued that impact fees attract jobs by reducing developers' uncertainty, the development community maintains that they operate as an excise tax, reducing commercial development and driving away jobs. We use Florida county level panel data, from 1990-2005, to investigate the relationship between private employment and different types of impact fees. We find that commercial fees and school fees have countervailing effects, with the former repelling jobs and the latter attracting jobs. These results are consistent with our theory driven expectations. Our investigation also suggests that differences between our results and those obtained in prior studies can be attributed to two factors: the latter studies' violation of the condition of strict exogeneity required for consistent estimation and a failure to account for differential employment effects across various types of impact fees.

Suggested Citation

  • Burge, Gregory & Ihlanfeldt, Keith, 2009. "Development impact fees and employment," Regional Science and Urban Economics, Elsevier, vol. 39(1), pages 54-62, January.
    • Handle: RePEc:eee:regeco:v:39:y:2009:i:1:p:54-62
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    References listed on IDEAS

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    1. Burge, Gregory & Ihlanfeldt, Keith, 2006. "Impact fees and single-family home construction," Journal of Urban Economics, Elsevier, vol. 60(2), pages 284-306, September.
    2. Gyourko, Joseph, 1991. "Impact fees, exclusionary zoning, and the density of new development," Journal of Urban Economics, Elsevier, vol. 30(2), pages 242-256, September.
    3. Brueckner, Jan K., 1997. "Infrastructure financing and urban development:: The economics of impact fees," Journal of Public Economics, Elsevier, vol. 66(3), pages 383-407, December.
    4. Yinger, John, 1998. "The Incidence of Development Fees and Special Assessments," National Tax Journal, National Tax Association, vol. 51(n. 1), pages 23-41, March.
    5. Ihlanfeldt, Keith R. & Shaughnessy, Timothy M., 2004. "An empirical investigation of the effects of impact fees on housing and land markets," Regional Science and Urban Economics, Elsevier, vol. 34(6), pages 639-661, November.
    6. Justin Wolfers, 2006. "Did Unilateral Divorce Laws Raise Divorce Rates? A Reconciliation and New Results," American Economic Review, American Economic Association, vol. 96(5), pages 1802-1820, December.
    7. Helen F. Ladd, 1998. "local government tax and land use policies in the united states," Books, Edward Elgar Publishing, number 1332.
    8. Yinger, John, 1998. "The Incidence of Development Fees and Special Assessments," National Tax Journal, National Tax Association;National Tax Journal, vol. 51(1), pages 23-41, March.
    9. Gregory Burge & Keith Ihlanfeldt, 2006. "The Effects Of Impact Fees On Multifamily Housing Construction," Journal of Regional Science, Wiley Blackwell, vol. 46(1), pages 5-23, February.
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    Cited by:

    1. Burge, Gregory, 2014. "The capitalization effects of school, residential, and commercial impact fees on undeveloped land values," Regional Science and Urban Economics, Elsevier, vol. 44(C), pages 1-13.
    2. Rohlin, Shawn M. & Thompson, Jeffrey P., 2018. "Local sales taxes, employment, and tax competition," Regional Science and Urban Economics, Elsevier, vol. 70(C), pages 373-383.
    3. Gorecki, Paul K. & Hennessy, Hugh & Lyons, Seán, 2011. "How impact fees and local planning regulation can influence deployment of telecoms infrastructure," Papers WP401, Economic and Social Research Institute (ESRI).
    4. Carlianne Patrick, 2014. "Does Increasing Available Non-Tax Economic Development Incentives Result in More Jobs?," National Tax Journal, National Tax Association;National Tax Journal, vol. 67(2), pages 351-386, June.
    5. Xiaofang Dong & Shihe Fu & Yufei Yuan, 2013. "Impact Fees and Real Estate Prices: Evidence from 35 Chinese Cities," Frontiers of Economics in China-Selected Publications from Chinese Universities, Higher Education Press, vol. 8(2), pages 207-219, June.
    6. Adam T. Jones, 2015. "Impact Fees and Employment Growth," Economic Development Quarterly, , vol. 29(4), pages 341-346, November.
    7. Adam Jones, 2015. "Fees and Firms: An Empirical Examination of the Relationship Between Development Impact Fees and Firms," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 43(2), pages 261-269, June.
    8. Taner Osman, 2020. "Restrictive Land Use Regulations and Economic Performance," International Regional Science Review, , vol. 43(4), pages 291-315, July.
    9. repec:wyi:journl:002181 is not listed on IDEAS

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    Land use regulation Job growth;

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