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Industry chasing and the tax effect: a question of approach

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  • Mitch Kunce
  • John List

Abstract

This paper employs a sample selection model to analyse the effects of a location's tax climate on manufacturing activity from 1974-1994. Results reveal the 'tax effect' varies substantially across industry and is significant in half of the industries analysed-chemical and allieds and food and kindreds. These results reinforce the lack of a robust consensus regarding this issue and highlight the importance of disaggregating industry.

Suggested Citation

  • Mitch Kunce & John List, 1998. "Industry chasing and the tax effect: a question of approach," Applied Economics Letters, Taylor & Francis Journals, vol. 5(6), pages 347-350.
    • Handle: RePEc:taf:apeclt:v:5:y:1998:i:6:p:347-350
    DOI: 10.1080/135048598354690
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    References listed on IDEAS

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    1. Bartik, Timothy J, 1985. "Business Location Decisions in the United States: Estimates of the Effects of Unionization, Taxes, and Other Characteristics of States," Journal of Business & Economic Statistics, American Statistical Association, vol. 3(1), pages 14-22, January.
    2. Kevin T. Duffy-Deno & Randall W. Eberts, 1996. "Public Infrastructure and Regional Economic Development: A Simultaneous Equations Approach," Book chapters authored by Upjohn Institute researchers, in: Niles Hansen & Kenneth J. Button & Peter Nijkamp (ed.),Regional Policy and Regional Integration, pages 295-309, W.E. Upjohn Institute for Employment Research.
    3. Papke, Leslie E., 1991. "Interstate business tax differentials and new firm location : Evidence from panel data," Journal of Public Economics, Elsevier, vol. 45(1), pages 47-68, June.
    4. 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.
    5. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 31(3), pages 129-137.
    6. Helms, L Jay, 1985. "The Effect of State and Local Taxes on Economic Growth: A Time Series-Cross Section Approach," The Review of Economics and Statistics, MIT Press, vol. 67(4), pages 574-582, November.
    7. Carlton, Dennis W, 1983. "The Location and Employment Choices of New Firms: An Econometric Model with Discrete and Continuous Endogenous Variables," The Review of Economics and Statistics, MIT Press, vol. 65(3), pages 440-449, August.
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    Cited by:

    1. Richard M. Vogel, 2000. "Relocation Subsidies: Regional Growth Policy or Corporate Welfare?," Review of Radical Political Economics, Union for Radical Political Economics, vol. 32(3), pages 437-447, September.

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