The Employment Effects of State Hiring Credits

Neumark, David; Grijalva, Diego F.

doi:10.1177/0019793916683930

Cited by 39 publications

(26 citation statements)

References 26 publications

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“…Neumark & Grijalva (2017). Complex paper in which regress change in employment on current and 12 months of lag change in adoption of employment tax credits that reward employment.…”

mentioning

confidence: 99%

“But For” Percentages for Economic Development Incentives: What Percentage Estimates Are Plausible Based on the Research Literature?

Bartik

2018

SSRN Journal

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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.

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“…Neumark & Grijalva (2017). Complex paper in which regress change in employment on current and 12 months of lag change in adoption of employment tax credits that reward employment.…”

mentioning

confidence: 99%

“But For” Percentages for Economic Development Incentives: What Percentage Estimates Are Plausible Based on the Research Literature?

Bartik

2018

SSRN Journal

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“…As Bartik (2018a) described in detail, many differences in results can be linked to biases in the estimating strategies. However, even focusing on those studies with more credible research designs and no obvious direction of bias, there are still a range of estimated effects (e.g., Bartik & Hollenbeck, 2012; Chirinko & Wilson, 2017; Donegan et al, 2018; Neumark & Grijalva, 2017; Patrick, 2014b).…”

Section: Literature Reviewmentioning

confidence: 99%

Incentivizing the Missing Middle: The Role of Economic Development Policy

Patrick

Stephens

2020

Economic Development Quarterly

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The shrinking middle class and increasing income polarization in the United States are issues of concern to policy makers and others. Economic development incentives are a key policy tool used at the state and local levels to promote local economic growth, and, presumably, provide employment opportunities. However, these incentives may have unintended consequences that may be contributing to the decline of the middle class. The authors combine detailed industry-level detail on incentives with proprietary county-level industry employment data and two methods for defining middle-class industries. Using an instrumental variable approach, the authors estimate how differential economic development policies affect middle-class jobs. The authors find evidence that incentivizing creative-class and high-wage industries may be contributing to the hollowing out of the middle class. Without hurting employment in other industries, targeting working-class and middle-wage industries alleviates this trend, while reducing incentives on creative-class and high-wage industries could help increase working and middle-class employment.

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“…Allowing for lagged effects is essential since the hiring subsidy programs may take a few years to gain traction and have a noticeable effect on employment (Neumark and Grijalva, 2015). Moreover, including lagged effects allows us to compare counties that have a similar history of treatment.…”

Section: Estimating the Effect Of Hiring Creditsmentioning

confidence: 99%

“…Our paper contributes most directly to a literature which has sought to empirically measure if, and to what degree, hiring credits are effective. Neumark and Grijalva (2015) use cross-state variation in the adoption of hiring credits to estimate their impact. They find no impacts on employment growth in general but small positive effects during recessionary periods or when programs incorporate recapture provisions.…”

Section: Introductionmentioning

confidence: 99%

The Efficacy of Hiring Credits in Distressed Areas

Pérez

Suher

2020

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We analyze the efficacy of hiring tax credits, particularly in distressed labor markets. These types of programs have proven hard to assess as their introduction at the state level tends to be endogenous to local conditions and future prospects. We conduct an empirical study of a hiring tax credit program implemented in North Carolina in the mid 1990s, which has a quasi-experimental design. Specifically, the 100 counties in the state are ranked each year by a formula trying to capture their economic distress level. The generosity of the tax credits jumps discontinuously at various ranking thresholds allowing for the use of regression discontinuity methods. Our estimates show fairly sizable and robust impacts on unemployment-a $9,000 credit leads to a nearly 0.5 percentage points reduction in the unemployment rate in the counties where the credit was made available. The attendant increase in employment levels appears to be around 3%.

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The Employment Effects of State Hiring Credits

Cited by 39 publications

References 26 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?

Incentivizing the Missing Middle: The Role of Economic Development Policy

The Efficacy of Hiring Credits in Distressed Areas

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