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Does Chicago’s Tax Increment Financing (TIF) Programme Pass the ‘But-for’ Test? Job Creation and Economic Development Impacts Using Time-series Data

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  • T. William Lester

Abstract

Chicago uses tax increment financing (TIF) to promote economic development to a greater extent than any other large American city. This paper conducts a comprehensive assessment of the effectiveness of Chicago’s TIF programme in creating economic opportunities and catalysing real estate investments at the neighbourhood scale. This paper uses a unique panel dataset at the block-group level to analyse the impact of TIF designation and investments on employment change, business creation and building permit activity. After controlling for potential selection bias in TIF assignment, this paper shows that TIF ultimately fails the ‘but-for’ test and shows no evidence of increasing tangible economic development benefits for local residents. Implications for policy are considered.

Suggested Citation

  • T. William Lester, 2014. "Does Chicago’s Tax Increment Financing (TIF) Programme Pass the ‘But-for’ Test? Job Creation and Economic Development Impacts Using Time-series Data," Urban Studies, Urban Studies Journal Limited, vol. 51(4), pages 655-674, March.
    • Handle: RePEc:sae:urbstu:v:51:y:2014:i:4:p:655-674
    DOI: 10.1177/0042098013492228
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    References listed on IDEAS

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    Cited by:

    1. Yadavalli, Anita & Delgado, Michael, 2018. "Tax Increment Financing and Spatial Spillovers," 2018 Annual Meeting, August 5-7, Washington, D.C. 274490, Agricultural and Applied Economics Association.
    2. 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.
    3. Marina Spahlinger & Nancy Wayne, 2019. "Community Revitalization Levy as a Municipal Financing Mechanism in Alberta," SPP Research Papers, The School of Public Policy, University of Calgary, vol. 12(4), February.

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