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Business Incentive Adoption in the Recession

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  • Mildred E. Warner
  • Lingwen Zheng

Abstract

Business incentive use rose dramatically among U.S. municipalities after the Great Recession. This article seeks to explain that rise using national surveys of local government economic development practice for 2004 and 2009. The authors differentiate business incentive use by three types (tax abatements, labor support, and planning) and by new and experienced users. We find that higher business incentive use is a response to lower property tax and higher unemployment. We also find that higher business incentive use is associated with greater attention to accountability, even among the new business incentive users. Governments that rely more heavily on tax incentives to firms face more competition and lower tax revenue than governments that use more incentives focused on labor and planning. We also find broadening attention to accountability measures and a widening of community development investment to arenas that target improved quality of life.

Suggested Citation

  • Mildred E. Warner & Lingwen Zheng, 2013. "Business Incentive Adoption in the Recession," Economic Development Quarterly, , vol. 27(2), pages 90-101, May.
    • Handle: RePEc:sae:ecdequ:v:27:y:2013:i:2:p:90-101
    DOI: 10.1177/0891242413479140
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    References listed on IDEAS

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    1. Timothy J. Bartik, 1991. "Who Benefits from State and Local Economic Development Policies?," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number wbsle.
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    3. Laura REESE, 2012. "CREATIVE CLASS OR PROCREATIVE CLASS: IMPLICATIONS FOR LOCAL ECONoMIC DEVELOPMENT POLICY," Theoretical and Empirical Researches in Urban Management, Research Centre in Public Administration and Public Services, Bucharest, Romania, vol. 7(1), pages 5-26, February.
    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.
    5. Timothy J. Bartik, 2011. "Investing in Kids: Early Childhood Programs and Local Economic Development," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number iik.
    6. David L. Kay & James E. Pratt & Mildred E. Warner, 2007. "Role of Services in Regional Economy Growth," Growth and Change, Wiley Blackwell, vol. 38(3), pages 419-442, September.
    7. Peter S. Fisher & Alan H. Peters, 1998. "Industrial Incentives: Competition among American Cities and States," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number ii.
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    9. repec:rim:rimwps:36-08 is not listed on IDEAS
    10. Ann Markusen (ed.), 2007. "Reining in the Competition for Capital," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number ricc.
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    Citations

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    Cited by:

    1. Yuanshuo Xu & Mildred E Warner, 2016. "Does devolution crowd out development? A spatial analysis of US local government fiscal effort," Environment and Planning A, , vol. 48(5), pages 871-890, May.
    2. Yuanshuo Xu & Mildred E. Warner, 2015. "Understanding employment growth in the recession: the geographic diversity of state rescaling," Cambridge Journal of Regions, Economy and Society, Cambridge Political Economy Society, vol. 8(2), pages 359-377.
    3. Tidiane Ly, 2019. "Taxes, traffic jam and spillover in the metropolis," Working Papers halshs-02283118, HAL.
    4. Conroy, Tessa & Deller, Steven & Tsvetkova, Alexandra, 2016. "Regional business climate and interstate manufacturing relocation decisions," Regional Science and Urban Economics, Elsevier, vol. 60(C), pages 155-168.
    5. Virginie Mamadouh & Luiza Bialasiewicz & Gordon F. Mulligan & Neil Reid & Michael S. Moore, 2016. "The Current Health of Metropolitan Labour Markets in the United States," Tijdschrift voor Economische en Sociale Geografie, Royal Dutch Geographical Society KNAG, vol. 107(2), pages 232-253, April.
    6. Mary Donegan & T. William Lester & Nichola Lowe, 2018. "Striking a Balance: A National Assessment of Economic Development Incentives," Upjohn Working Papers 18-291, W.E. Upjohn Institute for Employment Research.
    7. Tidiane Ly, 2019. "Taxes, traffic jam and spillover in the metropolis," Working Papers halshs-02275672, HAL.
    8. Tidiane Ly, 2019. "Taxes, traffic jam and spillover in the metropolis," Working Papers 1925, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.

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