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Article
Did incentives help municipalities recover from the Great Recession? Evidence from Midwestern cities.
Growth and Change
(2019)
Abstract
This study assesses the impacts of local business incentives in the largest urban areas of Illinois, Michigan, and Wisconsin, three Midwestern states that share similar histories and settings. We assembled a unique dataset combining information on two types of incentives, tax increment financing districts and tax abatements, together with socio-economic, geographic, fiscal, and spatial competitive characteristics for all of the municipalities in six metropolitan areas. The outcome measures include employment growth, establishment formation, and business relocation. The analysis extends knowledge of the effects of economic development incentives in two ways. First, we improve upon previous research by incorporating key factors in municipal decisions to offer incentives. Second, we add to limited empirical evidence concerning local incentives following the Great Recession. Variation in the use of incentives reflects not only local decision-making but also differing fiscal capacities and situations of adaptation to adverse economic conditions, with some governments pulling back on incentives and others initiating new approaches to retain or lure businesses.
Keywords
- economic development,
- incentives,
- subsidies,
- municipal fiscal condition,
- business creation,
- business relocation
Disciplines
Publication Date
2019
Citation Information
Joshua Drucker, Geon Kim and Rachel Weber. "Did incentives help municipalities recover from the Great Recession? Evidence from Midwestern cities." Forthcoming in Growth and Change.