IDEAS home Printed from https://ideas.repec.org/p/upj/weupjo/tjbge14.html
   My bibliography  Save this paper

Simulating the Effects of the Tax Credit Program of the Michigan Economic Growth Authority on Job Creation and Fiscal Benefits

Author

Abstract

This article simulates job and fiscal impacts of the Michigan Economic Growth Authority’s tax credit program for job creation, commonly called “MEGA.†Under plausible assumptions about how such credits affect business location decisions, the net costs per job created of the MEGA program are simulated to be of modest size. The job creation impacts of MEGA are simulated to be considerably larger than devoting similar dollar resources to general business tax cuts. The simulation methodology developed here is applicable to incentives in other states.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Timothy J. Bartik & George Erickcek, "undated". "Simulating the Effects of the Tax Credit Program of the Michigan Economic Growth Authority on Job Creation and Fiscal Benefits," Upjohn Working Papers tjbge14, W.E. Upjohn Institute for Employment Research.
    • Handle: RePEc:upj:weupjo:tjbge14
    as

    Download full text from publisher

    File URL: http://edq.sagepub.com/content/28/4/314
    Download Restriction: All working papers are copyrighted.
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. George I. Treyz & Dan S. Rickman & Gang Shao, 1991. "The REMI Economic-Demographic Forecasting and Simulation Model," International Regional Science Review, , vol. 14(3), pages 221-253, December.
    2. Kelly D. Edmiston, 2004. "The Net Effects of Large Plant Locations and Expansions on County Employment," Journal of Regional Science, Wiley Blackwell, vol. 44(2), pages 289-320, May.
    3. Robert T. Greenbaum & Jim Landers, 2009. "Why Are State Policy Makers Still Proponents of Enterprise Zones? What Explains Their Action in the Face of a Preponderance of the Research?," International Regional Science Review, , vol. 32(4), pages 466-479, October.
    4. 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.
    5. 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.
    6. Todd M. Gabe & David S. Kraybill, 2002. "The Effect of State Economic Development Incentives on Employment Growth of Establishments," Journal of Regional Science, Wiley Blackwell, vol. 42(4), pages 703-730.
    7. Wei Fan & Frederick Treyz & George Treyz, 2000. "An Evolutionary New Economic Geography Model," Journal of Regional Science, Wiley Blackwell, vol. 40(4), pages 671-695, November.
    8. Kevin Hollenbeck, 2008. "Is There a Role for Public Support of Incumbent Worker On-the-Job Training?," Upjohn Working Papers 08-138, W.E. Upjohn Institute for Employment Research.
    9. 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.
    10. William Hoyt & Christopher Jepsen & Kenneth Troske, 2009. "Business Incentives and Employment: What Incentives Work and Where?," Working Papers 2009-02, University of Kentucky, Institute for Federalism and Intergovernmental Relations.
    11. Timothy J. Bartik, 1992. "The Effects of State and Local Taxes on Economic Development: A Review of Recent Research," Economic Development Quarterly, , vol. 6(1), pages 102-111, February.
    12. 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.
    13. Joel A. Elvery, 2009. "The Impact of Enterprise Zones on Resident Employment," Economic Development Quarterly, , vol. 23(1), pages 44-59, February.
    14. Lee, Yoonsoo, 2008. "Geographic redistribution of US manufacturing and the role of state development policy," Journal of Urban Economics, Elsevier, vol. 64(2), pages 436-450, September.
    15. 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.
    16. Matias Busso & Jesse Gregory & Patrick Kline, 2013. "Assessing the Incidence and Efficiency of a Prominent Place Based Policy," American Economic Review, American Economic Association, vol. 103(2), pages 897-947, April.
    17. Ron Jarmin, 1998. "Manufacturing Extension And Productivity Dynamics," Working Papers 98-8, Center for Economic Studies, U.S. Census Bureau.
    18. 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.
    19. Timothy J. Bartik, 2001. "Jobs for the Poor: Can Labor Demand Policies Help?," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number tjb2001.
    20. Robert S. Chirinko & Daniel J. Wilson, 2010. "State business taxes and investment: state-by-state simulations," Economic Review, Federal Reserve Bank of San Francisco, pages 13-28.
    21. Faulk, Dagney, 2002. "Do State Economic Development Incentives Create Jobs? An Analysis of State Employment Tax Credits," National Tax Journal, National Tax Association, vol. 55(N. 2), pages 263-280, June.
    22. Moretti, Enrico, 2004. "Bidding for Industrial Plants: Does Winning a 'Million Dollar Plant' Increase Welfare?," Santa Cruz Department of Economics, Working Paper Series qt5cz0h23t, Department of Economics, UC Santa Cruz.
    23. Hines, James R, Jr, 1996. "Altered States: Taxes and the Location of Foreign Direct Investment in America," American Economic Review, American Economic Association, vol. 86(5), pages 1076-1094, December.
    24. David F. Merriman & Mark L. Skidmore & Russ D. Kashian, 2011. "Do Tax Increment Finance Districts Stimulate Growth in Real Estate Values?," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 39(2), pages 221-250, June.
    25. Peter T. Calcagno & Henry Thompson, 2004. "State Economic Incentives: Stimulus or Reallocation?," Public Finance Review, , vol. 32(6), pages 651-665, November.
    26. Neumark, David & Kolko, Jed, 2010. "Do enterprise zones create jobs? Evidence from California's enterprise zone program," Journal of Urban Economics, Elsevier, vol. 68(1), pages 1-19, July.
    27. Donald Bruce & William F. Fox & M.H. Tuttle, 2006. "Tax Base Elasticities: A Multi-State Analysis of Long-Run and Short-Run Dynamics," Southern Economic Journal, John Wiley & Sons, vol. 73(2), pages 315-341, October.
    28. Greenwood, Michael J, et al, 1991. "Migration, Regional Equilibrium, and the Estimation of Compensating Differentials," American Economic Review, American Economic Association, vol. 81(5), pages 1382-1390, December.
    29. 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.
    30. Michael I. Luger & Suho Bae, 2005. "The Effectiveness of State Business Tax Incentive Programs: The Case of North Carolina," Economic Development Quarterly, , vol. 19(4), pages 327-345, November.
    31. 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.
    32. Michael Greenstone & Enrico Moretti, 2003. "Bidding for Industrial Plants: Does Winning a 'Million Dollar Plant' Increase Welfare?," NBER Working Papers 9844, National Bureau of Economic Research, Inc.
    33. Faulk, Dagney, 2002. "Do State Economic Development Incentives Create Jobs? An Analysis of State Employment Tax Credits," National Tax Journal, National Tax Association;National Tax Journal, vol. 55(2), pages 263-280, June.
    34. Paul F. Byrne, 2010. "Does Tax Increment Financing Deliver on Its Promise of Jobs? The Impact of Tax Increment Financing on Municipal Employment Growth," Economic Development Quarterly, , vol. 24(1), pages 13-22, February.
    35. Harry J. Holzer & Richard N. Block & Marcus Cheatham & Jack H. Knott, 1993. "Are Training Subsidies for Firms Effective? The Michigan Experience," ILR Review, Cornell University, ILR School, vol. 46(4), pages 625-636, July.
    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. Timothy J. Bartik & Nathan Sotherland, 2019. "Local Job Multipliers in the United States: Variation with Local Characteristics and with High-Tech Shocks," Upjohn Working Papers 19-301, W.E. Upjohn Institute for Employment Research.
    2. Michael Wasylenko, 2020. "New York State Economic Status of Regions and Development Programs," Center for Policy Research Working Papers 220, Center for Policy Research, Maxwell School, Syracuse University.
    3. 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.
    4. 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.
    5. John Dove & Daniel Sutter, 2018. "Is There a Tradeoff Between Economic Development Incentives and Economic Freedom? Evidence from the US States," The Review of Regional Studies, Southern Regional Science Association, vol. 48(1), pages 55-69, Spring.
    6. Xue Zhang & Mildred E. Warner & George C. Homsy, 2017. "Environment, Equity, and Economic Development Goals: Understanding Differences in Local Economic Development Strategies," Economic Development Quarterly, , vol. 31(3), pages 196-209, August.
    7. Carlianne Patrick & Heather M. Stephens, 2020. "Incentivizing the Missing Middle: The Role of Economic Development Policy," Economic Development Quarterly, , vol. 34(2), pages 154-170, May.
    8. Nahid Sultana, 2022. "Machine leaching approaches to assess public attitude towards value-added tax in Saudi Arabia," SN Business & Economics, Springer, vol. 2(9), pages 1-18, September.

    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. 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 & 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.
    3. 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.
    4. Jeffrey Thompson, 2010. "Prioritizing Approaches to Economic Development in New England: Skills, Infrastructure, and Tax Incentives," Published Studies priorities_september7_per, Political Economy Research Institute, University of Massachusetts at Amherst.
    5. William Hoyt & Christopher Jepsen & Kenneth Troske, 2009. "Business Incentives and Employment: What Incentives Work and Where?," Working Papers 2009-02, University of Kentucky, Institute for Federalism and Intergovernmental Relations.
    6. Jacob Bundrick & Weici Yuan, 2019. "Do Targeted Business Subsidies Improve Income and Reduce Poverty? A Synthetic Control Approach," Economic Development Quarterly, , vol. 33(4), pages 351-375, November.
    7. Timothy J. Bartik, 2012. "The Future of State and Local Economic Development Policy: What Research Is Needed," Growth and Change, Wiley Blackwell, vol. 43(4), pages 545-562, December.
    8. 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.
    9. Moretti, Enrico, 2011. "Local Labor Markets," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 14, pages 1237-1313, Elsevier.
    10. Michael I. Luger & Suho Bae, 2005. "The Effectiveness of State Business Tax Incentive Programs: The Case of North Carolina," Economic Development Quarterly, , vol. 19(4), pages 327-345, November.
    11. Juan Carlos Suárez Serrato & Owen Zidar, 2016. "Who Benefits from State Corporate Tax Cuts? A Local Labor Markets Approach with Heterogeneous Firms," American Economic Review, American Economic Association, vol. 106(9), pages 2582-2624, September.
    12. T. William Lester & Nichola J. Lowe & Allan Freyer, 2014. "Mediating Incentive Use," Economic Development Quarterly, , vol. 28(2), pages 132-146, May.
    13. Moretti, Enrico & Wilson, Daniel J., 2014. "State incentives for innovation, star scientists and jobs: Evidence from biotech," Journal of Urban Economics, Elsevier, vol. 79(C), pages 20-38.
    14. 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.
    15. Mark D. Partridge & M. Rose Olfert, 2011. "The Winners' Choice: Sustainable Economic Strategies for Successful 21st-Century Regions," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 33(2), pages 143-178.
    16. Reynolds, C. Lockwood & Rohlin, Shawn M., 2015. "The effects of location-based tax policies on the distribution of household income: Evidence from the federal Empowerment Zone program," Journal of Urban Economics, Elsevier, vol. 88(C), pages 1-15.
    17. Sumei Zhang, 2019. "Rethinking U.S. enterprise zones: The role of research design in program evaluation," Local Economy, London South Bank University, vol. 34(6), pages 545-571, September.
    18. Nidhi Chaudhary & Jonathan Potter, 2019. "Evaluation of the local employment impacts of enterprise zones: A critique," Urban Studies, Urban Studies Journal Limited, vol. 56(10), pages 2112-2159, August.
    19. Freedman, Matthew, 2012. "Teaching new markets old tricks: The effects of subsidized investment on low-income neighborhoods," Journal of Public Economics, Elsevier, vol. 96(11), pages 1000-1014.
    20. Cailin Slattery & Owen Zidar, 2020. "Evaluating State and Local Business Incentives," Journal of Economic Perspectives, American Economic Association, vol. 34(2), pages 90-118, Spring.

    More about this item

    Keywords

    State and local economic development policy; tax incentives; fiscal impact analysis; labor market benefits; regional multipliers;
    All these keywords.

    JEL classification:

    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • R28 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Government Policy
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:upj:weupjo:tjbge14. 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: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/upjohus.html .

    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.