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The effectiveness of job creation tax credits

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  • Gurmu, Shiferaw
  • Sjoquist, David L.
  • Wheeler, Laura

Abstract

We estimate the causal effects of job creation tax credits on employment using the exogenous spatial and time variations in the value of the credits across Georgia's 159 counties over a 15-year period. We employ three empirical approaches: regression discontinuity design models making use of the sharp discontinuity in eligibility for credits of different value; difference-in-differences models using inter temporal and inter and intra-county changes in credit value; and employment differences in bordering census tracts that qualify for different valued credits. We obtain mixed results, but in general they provide little evidence for the proposition that job creation tax credits create additional employment.

Suggested Citation

  • Gurmu, Shiferaw & Sjoquist, David L. & Wheeler, Laura, 2021. "The effectiveness of job creation tax credits," Regional Science and Urban Economics, Elsevier, vol. 90(C).
    • Handle: RePEc:eee:regeco:v:90:y:2021:i:c:s0166046221000818
    DOI: 10.1016/j.regsciurbeco.2021.103721
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    Cited by:

    1. Shiferaw Gurmu & David L. Sjoquist & Laura Wheeler, 2022. "The Effect of Georgia's Job Tax Credit Program on Job Creation," Center for State and Local Finance Working Paper Series cslf2202, Andrew Young School of Policy Studies, Georgia State University.

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    More about this item

    Keywords

    Job creation tax credits; State employment growth; State economic development;
    All these keywords.

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • R51 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Finance in Urban and Rural Economies

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