The impact of Urban Enterprise Zones on establishment location decisions and labor market outcomes: evidence from France

Abstract

In this article, we study the impact of a French enterprise zone program-the 'Zones Franches Urbaines' (ZFUs) policy-on establishment location decisions and on labor market outcomes. Our main identification strategy, which combines spatial and time differencing, shows that conditional on locating in a municipality that hosts a ZFU, the policy has a positive and sizable impact on the probability to locate in the ZFU part rather than in the non-ZFU part of municipalities. However, the impact is highly heterogeneous across zones, industries and firms. We also show that this positive effect is entirely due to within-municipality diversion effects. Regarding labor market outcomes, the policy has a positive effect on employment, especially for low-wage workers. As for wages, the effect is null for low-wage workers, and negative for highwage ones.

Heterogeneous impacts of China's economic and development zone program

“…First, opportunistic firms may self-select into areas targeted by place-based policies ex post, causing estimates to be biased. Existing studies find that cluster policies induce some firms to relocate to target areas to benefit from preferential policies (Fontagne, Koenig, Mayneris, & Poncet, 2013;Mayer, Mayneris, & Py, 2015), which in turn, could generate displacement effects that occur within areas and from other outside areas (Boarnet, 1998). 3 A second empirical challenge relates to the issue of selection.…”

Some Causal Effects of an Industrial Policy

“…Some other studies have also used firm-level econometric techniques to evaluate the direct impact of 3 Holmes (1998); Albouy (2009); and Wilson (2009) consider other place-based tax policies, while Wren and Taylor (1999); Bronzini and de Blasio (2006); Martin, Mayer, and Mayneris (2011);and Becker, Egger, and von Ehrlich (2010, 2012 provide evidence for regional policy in Europe. Gibbons, Overman, and Sarvimäki (2011); and Einiö and Overman (2015) discuss similar place-based schemes in the United Kingdom, while Gobillon, Magnac, and Selod (2012) and Mayer, Mayneris, and Py (2017) provide estimates for France and Cerqua and Pellegrini (2014) for Italy. In contrast to RSA, which targets specific firms within eligible areas, these schemes are generally not discretionary (subject to the firm meeting some basic requirements).…”

Targeted Business Incentives and the Debt Behavior of Households

“…Given the institutional rules of the TEZP, this is not surprising. However, it is in contrast with many other evaluations of place-based programs that find evidence of negative spillovers in terms of economic activity (e.g., Givord et al 2013, Hanson and Rohlin 2013, Mayer et al 2015.…”

“…However, while the goal of economic policy is often to ensure political stability through greater equity (Accetturo and de Blasio 2012), Busso et al (2013, p. 897) argue that "economists have traditionally expressed little support" for place-based programs out of fear that "they will generate large distortions in economic behavior." Indeed, Gobillon et al (2012, p. 881) describes place-based policies as "rather controversial," as does Mayer et al (2015).…”