IDEAS home Printed from https://ideas.repec.org/a/sae/urbstu/v31y1994i8p1251-1278.html
   My bibliography  Save this article

Can Local Incentives Alter a Metropolitan City's Economic Development?

Author

Listed:
  • Robert W. Wassmer

    (Department of Economics, Wayne State University, Detroit, Michigan 48202, USA)

Abstract

Cities in the US and Europe have chosen increasingly to offer incentives designed to attract and retain local economic development. The increased use of local incentives has occurred with little or no empirical test of their effectiveness. This paper contains a statistical method that can be applied to any group of cities to measure the 'additive effect', or lack of it, that incentives exert on local economic development. Regression analysis applied to cities in the Detroit metropolitan area indicates that incentive efficacy depends on city-specific characteristics and how economic development is measured. Although there are situations where incentive offers exert an additive effect on local economic development, in a majority of situations this is not the outcome.

Suggested Citation

  • Robert W. Wassmer, 1994. "Can Local Incentives Alter a Metropolitan City's Economic Development?," Urban Studies, Urban Studies Journal Limited, vol. 31(8), pages 1251-1278, October.
    • Handle: RePEc:sae:urbstu:v:31:y:1994:i:8:p:1251-1278
    DOI: 10.1080/00420989420081151
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1080/00420989420081151
    Download Restriction: no
    File URL: https://libkey.io/10.1080/00420989420081151?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. K.G. Willis, 1985. "Estimating the Benefits of Job Creation from Local Investment Subsidies," Urban Studies, Urban Studies Journal Limited, vol. 22(2), pages 163-177, April.
    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.
    3. 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, November.
    4. Paul Foley, 1992. "Local Economic Policy and Job Creation: A Review of Evaluation Studies," Urban Studies, Urban Studies Journal Limited, vol. 29(3-4), pages 557-598, May.
    5. R W Wassmer, 1990. "Local Fiscal Variables and Intrametropolitan Firm Location: Regression Evidence from the United States and Research Suggestions," Environment and Planning C, , vol. 8(3), pages 283-296, September.
    6. Palumbo, George & Sacks, Seymour & Wasylenko, Michael, 1990. "Population decentralization within metropolitan areas: 1970-1980," Journal of Urban Economics, Elsevier, vol. 27(2), pages 151-167, March.
    7. William F. Fox, 1981. "Fiscal Differentials and Industrial Location: Some Empirical Evidence," Urban Studies, Urban Studies Journal Limited, vol. 18(1), pages 105-111, February.
    8. Anderson, John E., 1990. "Tax Increment Financing: Municipal Adoption and Growth," National Tax Journal, National Tax Association, vol. 43(2), pages 155-63, June.
    9. Robert W. Wassmer, 1992. "Property Tax Abatement and the Simultaneous Determination of Local Fiscal Variables in a Metropolitan Area," Land Economics, University of Wisconsin Press, vol. 68(3), pages 263-282.
    10. Anderson, John E., 1990. "Tax Increment Financing: Municipal Adoption and Growth," National Tax Journal, National Tax Association;National Tax Journal, vol. 43(2), pages 155-163, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. George A. Erickcek & Hannah McKinney, 2004. "Small Cities Blues: Looking for Growth Factors in Small and Medium-Sized Cities," Upjohn Working Papers 04-100, W.E. Upjohn Institute for Employment Research.
    2. Anita Yadavalli & Jim Landers, 2017. "Tax Increment Financing: A Propensity Score Approach," Economic Development Quarterly, , vol. 31(4), pages 312-325, November.
    3. Darin Wohlgemuth & Maureen Kilkenny, 1998. "Firm Relocation Threats and Copy Cat Costs," International Regional Science Review, , vol. 21(2), pages 139-162, August.
    4. George A. Erickcek & Hannah McKinney, 2006. "“Small Cities Blues:†Looking for Growth Factors in Small and Medium-Sized Cities," Economic Development Quarterly, , vol. 20(3), pages 232-258, August.
    5. Robert T. Greenbaum & Jim Landers, 2014. "The Tiff Over TIF: A Review of the Literature Examining the Effectiveness of the Tax Increment Financing," National Tax Journal, National Tax Association;National Tax Journal, vol. 67(3), pages 655-674, September.
    6. Robert W. Wassmer & John E. Anderson, 2001. "Bidding for Business: New Evidence on the Effect of Locally Offered Economic Development Incentives in a Metropolitan Area," Economic Development Quarterly, , vol. 15(2), pages 132-148, May.
    7. Czurylo, Todd, 2023. "The effect of tax increment financing districts on job creation in Chicago," Journal of Urban Economics, Elsevier, vol. 134(C).
    8. Joyce Y. Man & Mark S. Rosentraub, 1998. "Tax Increment Financing: Municipal Adoption and Effects On Property Value Growth," Public Finance Review, , vol. 26(6), pages 523-547, November.
    9. Thierry Madiès, 1997. "Concurrence fiscale et intercommunalité," Revue de l'OFCE, Programme National Persée, vol. 63(1), pages 195-228.
    10. Joyce Y. Man, 1999. "Fiscal Pressure, Tax Competition and the Adoption of Tax Increment Financing," Urban Studies, Urban Studies Journal Limited, vol. 36(7), pages 1151-1167, June.
    11. Albert Solé Ollé & Elisabet Viladecans Marsal, "undated". "Creación de empleo e impuestos municipales: evidencia empírica con datos de panel," Studies on the Spanish Economy 102, FEDEA.
    12. Terry F. Buss, 2001. "The Effect of State Tax Incentives on Economic Growth and Firm Location Decisions: An Overview of the Literature," Economic Development Quarterly, , vol. 15(1), pages 90-105, February.
    13. Gary Sands & Laura A. Reese & Heather L. Khan, 2006. "Implementing Tax Abatements in Michigan: A Study of Best Practices," Economic Development Quarterly, , vol. 20(1), pages 44-58, February.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Felix, R. Alison & Hines, James R., 2013. "Who offers tax-based business development incentives?," Journal of Urban Economics, Elsevier, vol. 75(C), pages 80-91.
    2. Joyce Y. Man, 1999. "Fiscal Pressure, Tax Competition and the Adoption of Tax Increment Financing," Urban Studies, Urban Studies Journal Limited, vol. 36(7), pages 1151-1167, June.
    3. Hanson, Andrew, 2009. "Local employment, poverty, and property value effects of geographically-targeted tax incentives: An instrumental variables approach," Regional Science and Urban Economics, Elsevier, vol. 39(6), pages 721-731, November.
    4. Dye, Richard F. & Merriman, David F., 2000. "The Effects of Tax Increment Financing on Economic Development," Journal of Urban Economics, Elsevier, vol. 47(2), pages 306-328, March.
    5. Joyce Y. Man & Mark S. Rosentraub, 1998. "Tax Increment Financing: Municipal Adoption and Effects On Property Value Growth," Public Finance Review, , vol. 26(6), pages 523-547, November.
    6. Jasper Beekmans & Huub Ploegmakers & Karel Martens & Erwin van der Krabben, 2016. "Countering decline of industrial sites: Do local economic development policies target the neediest places?," Urban Studies, Urban Studies Journal Limited, vol. 53(14), pages 3027-3047, November.
    7. Anderson, John E. & Wassmer, Robert W., 1995. "The decision to 'bid for business': Municipal behavior in granting property tax abatements," Regional Science and Urban Economics, Elsevier, vol. 25(6), pages 739-757, December.
    8. Rachel Weber & Saurav Dev Bhatta & David Merriman, 2003. "Does Tax Increment Financing Raise Urban Industrial Property Values?," Urban Studies, Urban Studies Journal Limited, vol. 40(10), pages 2001-2021, September.
    9. Robert W. Wassmer & John E. Anderson, 2001. "Bidding for Business: New Evidence on the Effect of Locally Offered Economic Development Incentives in a Metropolitan Area," Economic Development Quarterly, , vol. 15(2), pages 132-148, May.
    10. Edelman, Mark, 2003. "Appraisal Comments on Tax Increment Financing Effectiveness in the Context of Evaluating Iowa Tax Policy Alternatives," Staff General Research Papers Archive 10207, Iowa State University, Department of Economics.
    11. Weber, Rachel & Bhatta, Saurav Dev & Merriman, David, 2007. "Spillovers from tax increment financing districts: Implications for housing price appreciation," Regional Science and Urban Economics, Elsevier, vol. 37(2), pages 259-281, March.
    12. Susan Mason & Kenneth P. Thomas, 2010. "Tax Increment Financing in Missouri: An Analysis of Determinants, Competitive Dynamics, Equity, and Path Dependency," Economic Development Quarterly, , vol. 24(2), pages 169-179, May.
    13. Matias Busso & Patrick Kline, 2008. "Do Local Economic Development Programs Work? Evidence from the Federal Empowerment Zone Program," Cowles Foundation Discussion Papers 1639, Cowles Foundation for Research in Economics, Yale University.
    14. Gibbons, Stephen & Overman, Henry & Sarvimäki, Matti, 2021. "The local economic impacts of regeneration projects: Evidence from UK's single regeneration budget," Journal of Urban Economics, Elsevier, vol. 122(C).
    15. Courant, Paul N., 1994. "How Would You Know a Good Economic Policy if You Tripped Over One? Hint: Don't Just Count Jobs," National Tax Journal, National Tax Association;National Tax Journal, vol. 47(4), pages 863-881, December.
    16. Krupka, Douglas J. & Noonan, Douglas S., 2009. "Empowerment Zones, neighborhood change and owner-occupied housing," Regional Science and Urban Economics, Elsevier, vol. 39(4), pages 386-396, July.
    17. Byrne, Paul F., 2005. "Strategic interaction and the adoption of tax increment financing," Regional Science and Urban Economics, Elsevier, vol. 35(3), pages 279-303, May.
    18. Cardona Bermeo, Jorge Enrique, 2002. "Manejo de pasivos contingentes en el marco de la disciplina fiscal en Colombia," Sede de la CEPAL en Santiago (Estudios e Investigaciones) 34872, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    19. Patrick Kline & Enrico Moretti, 2014. "People, Places, and Public Policy: Some Simple Welfare Economics of Local Economic Development Programs," Annual Review of Economics, Annual Reviews, vol. 6(1), pages 629-662, August.
    20. Benjamin Austin & Edward Glaeser & Lawrence Summers, 2018. "Jobs for the Heartland: Place-Based Policies in 21st-Century America," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 49(1 (Spring), pages 151-255.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:urbstu:v:31:y:1994:i:8:p:1251-1278. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: http://www.gla.ac.uk/departments/urbanstudiesjournal .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.