This article analyzes Enterprise Zones in Colorado to study the relationship between geographically targeted tax credits and the location of new businesses and jobs. Enterprise Zone (EZ) programs provide tax incentives for investment and job creation in economically lagging regions. While most states have EZ programs, past program evaluations have found a mixture of effectiveness. This research improves on existing literature by utilizing both establishment-level data and a border effects methodology (1) to control for unobservables that influence the self-selection of EZ regions and (2) to highlight EZ impacts across different industries. Results find that while EZ fiscal incentives have no effect on where new establishments locate in Colorado, they do increase the number of employees hired. Industry results highlight the heterogeneity of tax credit impacts within the EZ Program. Results are robust to a variety of specifications for land-use controls and in comparison to a propensity score matching model.
Alm, J., and J. Hart.1998. Enterprise zones and economic development in Colorado. Unpublished paper, University of Colorado -Boulder.
2.
Bartik, T.1996. Jobs, productivity, and local development: What implications does economic research have for the role of government?National Tax Journal47:847-60.
3.
Black, D.A., and J.A. Smith.2004. How robust is the evidence on the effects of college quality? Evidence from matching. Journal of Econometrics121 (1-2): 99-124.
4.
Black, S.E. (1999). Do better schools matter? Parental valuation of elementary education. Quarterly Journal of Economics114 (2): 577-99.
5.
Boarnet, M.G.2001. Enterprise zones and job creation: Linking evaluation and practice. Economic Development Quarterly15 (3): 242-54.
6.
Boarnet, M., and W. Bogart.1996. Enterprise zones and employment: Evidence from New Jersey. Journal of Urban Economics40:198-215.
7.
Bondonio, D., and J. Engberg.2000. Enterprise zones and local employment: Evidence from the states' programs. Regional Science and Urban Economics30 (5): 519-49.
8.
Bronars, S., and J. Lott.1998. Criminal deterrence, geographical spillovers, and the right to carry concealed handguns. American Economic Review88 (2): 475-79.
9.
Buss, T.2001. The effects of state tax incentives on economic growth and firm location decisions: An overview of the literature. Economic Development Quarterly15 (1): 90-105.
10.
Cameron, A.C., and P. Trivedi.2005. Microeconometric: Methods and applications . Cambridge: Cambridge University Press.
11.
de Bartolome, C., and M. Spiegel.1997. Does state economic development spending increase manufacturing employment?Journal of Urban Economics41:153-75.
12.
Engberg, J., and R. Greenbaum.1999. State enterprise zones and local housing markets. Journal of Housing Research10 (2): 163-87.
13.
Enterprise Zone Annual Report. 1996. Denver, CO: Office of Economic Development and International Trade.
14.
---. 1998. Denver, CO: Office of Economic Development and International Trade.
15.
---. 2005. Denver, CO: Office of Economic Development and International Trade.
16.
Erickson, R., and P. Syms.1986. The effects of EZs on local property markets. Regional Studies20:1-14.
17.
Greenbaum, R.T., and J.B. Engberg.2004. The impact of state enterprise zones on urban manufacturing establishments. Journal of Policy Analysis and Management23 (2): 315-39.
18.
Greenstone, M., and E. Moretti.2004. Bidding for industrial plants: Does winning a ``million dollar plant'' increase welfare? Working paper 04-39, Massachusetts Institute of Technology. November.
19.
Holcombe, R., and D. Lacombe.2004. Using matched border counties for policy analysis: The effects of entitlement programs on female headed households and female labor force participation. Eastern Economic Journal30 (3):411-25.
20.
Holmes, T.J.1998. The effect of state policies on the location of manufacturing: Evidence from state borders. Journal of Political Economy106:667-704.
21.
Lynch, D., and J. Zax.2004. An evaluation of Colorado's enterprise zone programs: Measuring the impact of establishment level employment and earnings per worker. Unpublished paper, University of Colorado -Boulder.
22.
Man, J.1995. The incidence of differential commercial property taxes: Empirical evidence. National Tax Journal48 (4): 479-96.
23.
McDonald, J.1993. The incidence of the property tax of commercial real estate: The case of downtown Chicago. National Tax Journal46 (2): 109-20.
24.
O'Keefe, S.2004. Job creation in California's enterprise zones: A comparison using a propensity score matching model. Journal of Urban Economics55: 131-50.
25.
Papke, L.1994. Tax policy and urban development: Evidence from the Indiana enterprise zone program. Journal of Public Economics54:37-49.
26.
Peters, A., and P. Fischer.2002. State enterprise zone programs: Have they worked?Kalamazoo, MI: W.E. Upjohn Institute.
27.
Porter, M.1990. The competitive advantage of nations. New York: Basic Books.
28.
Rosenthal, S., and W. Strange.2001. The determinants of agglomeration. Journal of Urban Economics50:191-229.
29.
Wheaton, W.1984. The incidence of inter-jurisdictional tax difference in property tax rates. National Tax Journal37 (4): 515-27.
30.
White, H.1980. A heteroskedasticity-consistent covariance matrix estimator and a direct test for heteroskedasticity. Econometrica48:817-30.
31.
Wilder, M., and B. Rubin.1996. Rhetoric versus reality: A review of studies on state enterprise zone programs. Journal of American Planning Association62:472-92.
32.
Woodbridge, J.2002. Econometric analysis of cross section and panel data. Cambridge, MA: MIT Press .
