A long-term evaluation of the first generation of French urban enterprise zones

Abstract

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. Abstract This paper provides new empirical assessment on the efficiency of locally-targeted tax incentives in revitalizing distressed areas. We focus on the first generation of the French "Enterprise Zone" intiative, implemented in 1997 in continental France. We use new georeferenced panel data at the firm level over a twelve-year period. The zone designation process suggests two empirical strategies: difference-in-difference regressions with subclassification on the propensity score and regression discontinuity design. Both methods yield similar results. We highlight a strong positive impact of the Entreprise Zone policy on employment and business location during the first years of the policy. However, this favourable assessment has to be moderated because it seems mostly due to firms that are less prone to stimulate either local employment or economic activities. In addition, after some years, the early positive results are reduced as the increase in business locations is partially offset by more frequent business discontinuations. Terms of use: Documents inKeywords: Enterprise Zones, Local Employment, Propensity Score Matching, Evaluation. JEL: C23, H71, R5 * We thank participants of INSEE and CREST seminars as well as French Applied Microeconomics Conference (Souse, 2011, June) and Conference on Public Policies, Labour and Regional economics (Metz, 2011, June). We thank more specifically Didier Blanchet, Anthony Briant, Xavier D'Haulfoeuille and Laurent Gobillon for useful comments and discussions. Any opinions expressed in this paper are those of the author and not of any institution.† INSEE-CREST, pauline.givord@insee.fr ‡ DARES, simon.quantin@travail.gouv.fr § INSEE-SciencesPo.-CREST, corentin.trevien@insee.fr 1 Titre français: Des incitations fiscales attractives : une évaluation de long terme de la première génération des Zones Franches Urbaines Abstract Cette étude propose de nouvelles estimations empiriques de l'efficacité des incitations fiscales ciblées pour revitaliser des territoires désavantagés. Nous nous concentrons sur la première génération des ZFU, mise en place en 1997 en France métropolitaine. Nous utilisons un panel de données géolocalisées au niveau entreprise sur une période de 12 ans. Le mode de désignation des zones suggère deux straté-gies empiriques : une méthode de différences de différences avec une classification sur le score de propension et des régressions sur discontinuités. Les deux méthodes donnent des résultats proc...

Indecent proposals: Estimating the impact of regional state aid through EU guideline compliance

“…Nevertheless, we estimate no effect on blue collar vacancies and more importantly, we do not see a (lasting) impact on unemployment. This contrasts with Criscuolo et al (2019) and corresponds more closely with other recent work, see Cerqua and Pellegrini (2017); Dettman et al (2016); Givord et al (2018), reporting corollaries to the estimated employment effects. Even though the employment effect remains substantial, our findings raise doubts about the long-run effectiveness of the programme.…”

“…Our identification strategy is notably different from the instrumental variables (IV) method used by Hanson (2009) and Criscuolo et al (2019) or other quasi-experimental approaches in regional policy evaluation that usually start from a sample of nearly eligible units where treated areas (or firms) are compared with runner-ups (Boarnet and Bogart, 1996;Bronzini and de Blasio, 2006;Busso et al, 2013), or with those receiving aid in later programming rounds (Briant et al, 2015;Busso et al, 2013;Neumark and Kolko, 2010). The CEM strategy outlined above refines the choices made by Givord et al (2018) to deal with non-linear dependency of the propensity scores on designation indicators by constructing the control group only from the set of eligible municipalities and using coarsened exact matching straight on the designation indicators to obtain balance.…”

“…Particularly for enterprise zone programs, designed to attract employment opportunities to distressed neighbourhoods via tax exemptions, studies have documented inefficient outcomes generated by relocation or crowding out, see Neumark and Simpson (2015) for a survey and Gobillon and Magnac (2016); Givord et al (2018); Mayer et al (2017) on the impact of the Zones Franches Urbaines (ZFU) in France. As some of these studies show, displacement can occur in close proximity to the targeted areas, so that even equity-based motivations fall short of rationalizing such policy.…”

Post-conflict area-based regeneration policy in deprived urban neighbourhoods

“…The effectiveness of economic ABIs on employment in assisted areas has been widely explored in economic literature, uncovering mixed results (Neumark and Simpson, 2015; What Works Centre for Local Economic Growth, 2016a, 2016b review the evidence). In highlighting but a few of the studies here, we note that positive effects of Enterprise Zones on local employment have been uncovered (Papke, 1994;Ham et al, 2011;Busso, Gregory and Kline, 2013;Mayer, Mayneris and Py, 2015;Cizkowicz et al, 2017), but the durability of benefits may erode over time (O'Keefe, 2004;Gobillon, Magnac and Selod, 2012;Givord, Quantin and Trevien, 2018). Alternatively, a number of other studies cast doubt on the effectiveness of enterprise zones in boosting local employment (Boarnet and Boagart, 1996;Bondonio and Engberg, 2000;Greenbaum and Engberg, 2000;Neumark and Kolko, 2010;Accetturo and de Blasio, 2012) Regional policy of the EU aspires to advance the economic performance of poorer regions and reduce regional disparities.…”

What are the Key Location Factors for Firms in Special Economic Zones? Evidence from Poland

“…Other studies on the functioning of French corporate zones Franches Urbaines (ZFU) (Givord et al, 2018;Mayer et al, 2017) proved that tax reliefs offered as a part of zonal policies in France become an effective instrument stimulating the inflow of capital to areas requiring support. French companies reacted quite strongly to such incentives.…”