An Analysis of the Employment Effects of the Washington High Technology Business and Occupation (B and O) Tax Credit: Technical Report

Bartik, Timothy J.; Hollenbeck, Kevin

doi:10.17848/wp12-187

Cited by 8 publications

(19 citation statements)

References 31 publications

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“…Among the positively biased estimates, three studies with relatively strong methodologies include, among the survey-based methodologies, Jensen (2017c); among the methodologies using data on county growth, Hoyt, Jepsen, and Troske (2008); among the methodologies using data on individual firms, . Among the studies with no obvious positive or negative bias, studies with relatively strong methodologies include Chirinko and Wilson (2008) among the studies of relative state performance with different incentive regimes, and Bartik and Hollenbeck (2012) as the only study in this group that compares firms that face different cost reductions due to incentive design. The four negatively biased studies were already summarized above.…”

Section: Discussion Of Selected Estimatesmentioning

confidence: 99%

“…7 In other words, the implied "but for" percentage for the typical ITC is 2.34 percent. Bartik and Hollenbeck (2012) look at how the Washington's State's R&D tax credit affects the marginal cost of expanding jobs for different Washington firms, and how these different marginal costs in turn affect the firm's employment growth. The Washington R&D credit is capped in dollar value per firm.…”

Section: Discussion Of Selected Estimatesmentioning

confidence: 99%

“…Because incentives are disproportionately awarded to growing 3 In addition to the incentive studies used here, which provide estimates of incentive effects that can be used to derive "but for" percentage estimates, there are numerous studies that assume various "but for" percentages and use those estimates to derive estimates of incentives' effects. These include Bartik (2018) revealed that an incentive it received was unnecessary. Furthermore, a firm that once received benefits from an incentive program may want the program to continue.…”

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confidence: 99%

“…Finally, one study, by Bartik and Hollenbeck (2012), compares the performance of different firms within a state but does so by relating job growth to whether the firm would receive greater incentive benefits due to preexisting firm characteristics that are plausibly unrelated to firm growth. This reveals the causal effects of incentives on firm growth, as the analysis focuses on variation in incentive usage that is uncorrelated with unobserved variables driving a firm's growth.…”

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confidence: 99%

“…A one-time offer of $4,500 per job would amount to about 0.27 percent of value-added over an infinite time horizon for a new plant, discounting the future at 12 percent per year. U.S. incentives average about 1.2 percent of value-added over an infinite time horizon (Bartik 2018), so average U.S. incentives are about five times as great.…”

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confidence: 99%

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"But For" Percentages for Economic Development Incentives: What Percentage Estimates are Plausible Based on the Research Literature?

Bartik¹

2018

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This paper reviews the research literature in the United States on effects of state and local "economic development incentives." Such incentives are tax breaks or grants, provided by state or local governments to individual firms, that are intended to affect firms' decisions about business location, expansion, or job retention. Incentives' benefits versus costs depend greatly on what percentage of incented firms would not have made a particular location/expansion/retention decision "but for" the incentive. Based on a review of 34 estimates of "but for" percentages, from 30 different studies, this paper concludes that typical incentives probably tip somewhere between 2 percent and 25 percent of incented firms toward making a decision favoring the location providing the incentive. In other words, for at least 75 percent of incented firms, the firm would have made a similar decision location/expansion/retention decision without the incentive. Many of the current incentive studies are positively biased toward overestimating the "but for" percentage. Better estimates of "but for" percentages depend on developing data that quantitatively measure diverse changes in incentive policies across comparable areas. JEL Classification Codes: R30, R12, H71

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Section: Discussion Of Selected Estimatesmentioning

confidence: 99%

Section: Discussion Of Selected Estimatesmentioning

confidence: 99%

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confidence: 99%

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confidence: 99%

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confidence: 99%

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"But For" Percentages for Economic Development Incentives: What Percentage Estimates are Plausible Based on the Research Literature?

Bartik¹

2018

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State incentives for innovation, star scientists and jobs: Evidence from biotech

Moretti¹,

Wilson²

2014

Journal of Urban Economics

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in ABSTRACTWe evaluate the effects of state-provided financial incentives for biotech companies, which are part of a growing trend of placed-based policies designed to spur innovation clusters. We estimate that the adoption of subsidies for biotech employers by a state raises the number of star biotech scientists in that state by about 15 percent over a three-year period. A 10 percent decline in the user cost of capital induced by an increase in R&D tax incentives raises the number of stars by 22 percent. Most of the gains are due to the relocation of star scientists to adopting states, with limited effect on the productivity of incumbent scientists already in the state. The gains are concentrated among private sector inventors. We uncover little effect of subsidies on academic researchers, consistent with the fact that their incentives are unaffected. Our estimates indicate that the effect on overall employment in the biotech sector is of comparable magnitude to that of star scientists. Consistent with a model where workers are fairly mobile across states, we find limited effects on salaries in the industry. We uncover large effects on employment in the nontraded sector due to a sizable multiplier effect, with the largest impact on employment in construction and retail. Finally, we find mixed evidence of a displacement effect on states that are geographically close, or states that are economically close as measured by migration flows. JEL Classification Codes: J2, H2

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Do payday lending bans protect or constrain regional economies? Evidence from the Military Lending Act's final rule

Carpenter,

Deming,

Anders

et al. 2023

Contemporary Economic Policy

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The 2007 Military Lending Act attempted to ban high‐interest loans to U.S. military members and the 2017 “Final Rule” further restricted access, causing regional shocks in payday lending exposure in counties with a military base. Difference‐in‐differences and dynamic estimators provide mixed evidence on the effect of this payday lending access shock on regional economic outcomes and local business outcomes. However, we consistently find statistically significant reduced entry and exit of firms. Given payday lenders congregate around low‐income and minoritized populations analogously to how they congregated around military bases, these results provide policy implications for more general usury bans.

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An Analysis of the Employment Effects of the Washington High Technology Business and Occupation (B and O) Tax Credit: Technical Report

Cited by 8 publications

References 31 publications

"But For" Percentages for Economic Development Incentives: What Percentage Estimates are Plausible Based on the Research Literature?

"But For" Percentages for Economic Development Incentives: What Percentage Estimates are Plausible Based on the Research Literature?

State incentives for innovation, star scientists and jobs: Evidence from biotech

Do payday lending bans protect or constrain regional economies? Evidence from the Military Lending Act's final rule

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