State Economic Development Policies and Incentives

Project Dates

10/31/2016 -


State and local economic development agencies offer tax incentives regularly despite a lack of rigorous research on their effectiveness. This project will support thorough and rigorous research on incentives and will support the development of several resources that may be used by agencies to estimate the impacts of incentives they may offer. The research analyses to be undertaken will result in three papers. The first paper will describe and analyze the variation across states and industries of the incentives provided in a unique database created under a previous agreement with Pew that contains data on incentives over the period from 1990 to 2015 in 33 states and 45 industries. The second paper will describe and explain the use of a revised version of a previously developed simulation model that allows state policymakers to estimate how a given package of incentives for a particular industry that has a particular schedule will affect the income of different income groups in the local economy. The third paper will provide empirical estimates of the multiplier effects of industries that are especially important to local economies and labor markets.

Besides the research activities, Institute staff members will develop a Manual on state economic development incentives and will provide technical advice to states that will include (but not be limited to): advice on improving state data systems for incentive evaluations; methodologies for incentives evaluation; and requests for proposals for incentives evaluations.


Pew Charitable Trusts

Subject Area

ECONOMIC DEVELOPMENT; Local labor markets; Regional policy and planning; Business and tax incentives