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How Are Businesses Responding to Minnesota’s Tax-Free Zone Program?

Author

Listed:
  • Tonya J. Hansen

    (Minnesota State University Moorhead, Moorhead, MN, USA)

  • Laura Kalambokidis

    (University of Minnesota, St. Paul, MN, USA, kalam002@umn.edu)

Abstract

In 2003, Minnesota enacted a tax-free-zone economic development program, Job Opportunity Building Zone (JOBZ), that is of a longer term and more generous than most similar state programs. In this article, the authors analyze publicly available data on the new investments in capital and labor that Minnesota businesses report making in response to the program. The authors find that businesses signing deals in 2004 and 2005 reported creating 4,891 jobs and investing $768 million, with the reported activity varying significantly across the state. The number of jobs reportedly created represents less than 1% of Minnesota’s total nonfarm, private employment. The authors also combine the businesses’ reported data with county-level economic data and analyze how JOBZ-related investment is correlated with economic growth in each county. The authors find little evidence of JOBZ’s impact on county-level economic growth during the first 3 years of the program, but do find significant impacts of several workforce and demographic variables on county-level growth.

Suggested Citation

  • Tonya J. Hansen & Laura Kalambokidis, 2010. "How Are Businesses Responding to Minnesota’s Tax-Free Zone Program?," Economic Development Quarterly, , vol. 24(2), pages 180-192, May.
    • Handle: RePEc:sae:ecdequ:v:24:y:2010:i:2:p:180-192
    DOI: 10.1177/0891242409359407
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    References listed on IDEAS

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    2. Papke, Leslie E., 1994. "Tax policy and urban development : Evidence from the Indiana enterprise zone program," Journal of Public Economics, Elsevier, vol. 54(1), pages 37-49, May.
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    4. Timothy J. Bartik, 2007. "Solving the Problems of Economic Development Incentives," Book chapters authored by Upjohn Institute researchers, in: Ann Markusen (ed.), Reining in the Competition for Capital, chapter 5, pages 103-139, W.E. Upjohn Institute for Employment Research.
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    Cited by:

    1. Timothy J. Bartik & George A. Erickcek, 2012. "Simulating the Effects of Michigan's MEGA Tax Credit Program on Job Creation and Fiscal Benefits," Upjohn Working Papers 12-185, W.E. Upjohn Institute for Employment Research.
    2. Timothy J. Bartik & George Erickcek, 2014. "Simulating the Effects of the Tax Credit Program of the Michigan Economic Growth Authority on Job Creation and Fiscal Benefits," Economic Development Quarterly, , vol. 28(4), pages 314-327, November.
    3. Brian E. Whitacre & David Shideler & Randi Williams, 2016. "Do Incentive Programs Cause Growth? The Case of the Oklahoma Quality Jobs Program and Community-Level Economic Growth," Economic Development Quarterly, , vol. 30(1), pages 62-74, February.
    4. Timothy J. Bartik, 2018. ""But For" Percentages for Economic Development Incentives: What percentage estimates are plausible based on the research literature?," Upjohn Working Papers 18-289, W.E. Upjohn Institute for Employment Research.
    5. Stephen M. Kosovich, 2019. "Employment impact of local economic development incentives: the case of Texas economic development corporations," Economics Bulletin, AccessEcon, vol. 39(3), pages 1808-1816.
    6. Timothy J. Bartik & Kevin Hollenbeck, 2012. "An Analysis of the Employment Effects of the Washington High Technology Business and Occupation (B&O) Tax Credit," Upjohn Working Papers 12-187, W.E. Upjohn Institute for Employment Research.

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