The Effect of Location Based Tax Incentives on Establishment Location and Employment Across Industry Sectors
نویسندگان
چکیده
This paper examines the potential for location-based employment tax incentives to have a differential effect on establishment location and employment across industry sectors. We model the differential effect of the location-based federal Empowerment Zone (EZ) wage tax credit on equilibrium labor and total cost savings across industry sectors. The model guides our empirical work, as we test the effect of the program across industry sectors. Our empirical analysis shows that location based-tax incentives have a positive effect on firm location in some of the industries our model predicts and a negative effect in industries that could be crowded out.
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