Shawn Rohlin

Do Location-Based Tax Incentives Attract New Business Establishments?

This paper examines how offering tax incentives in a local area affects the entry of new business establishments. We use the federal Empowerment Zone (EZ) program as a natural experiment to test this relationship. Using instrumental variables estimation, we find that the EZ wage tax credit is responsible for attracting about 2.2 new establishments per 1,000 existing establishments, or a total of 20 new establishments in EZ areas. New establishment growth is strongest in the retail (about 40 new establishments) and service (about five new establishments) sectors, and offset by declines or slower growth in other industries.

The Effect of Location-Based Tax Incentives on Establishment Location and Employment across Industry Sectors

This article examines the potential for location-based employment tax incentives to have a differential effect on establishment location and employment across industry sectors. The authors model the differential effect of the location-based federal Empowerment Zone (EZ) wage tax credit on equilibrium labor and total cost savings across industry sectors. The model guides the empirical work, as the authors test the effect of the program across industry sectors. The empirical analysis shows that location-based tax incentives have a positive effect on firm location in some of the industries their model predicts and a negative effect in industries that could be crowded out.

How Dark Is Dark? Bright Lights, Big City, Racial Profiling

Grogger and Ridgeway (2006) use the daylight saving time shift to develop a police racial profiling test that is based on differences in driver race visibility and (hence) the race distribution of traffic stops across daylight and darkness. However, urban environments may be well lit at night, eroding the power of their test. We refine their test using streetlight location data in Syracuse, New York, and the results change in the direction of finding profiling of black drivers. Our preferred specification suggests that the odds of a black driver being stopped (relative to nonblack drivers) increase 15% in daylight compared to darkness.

A theoretical perspective on managed rangelands and irreversible states

In spite of a managers best attempts, a managed rangeland may hit an irreversible state in which it provides neither consumptive nor non-consumptive services to humans. Therefore, given a particular time based management regime, it is useful to know how long it takes for a rangeland to hit the irreversible state. The purpose of this paper is to conduct a theoretical analysis of this and related questions. In particular, we first provide a stochastic characterization of a time based range management regime. Second, we ascertain the expected amount of time it takes for our managed rangeland to hit the irreversible state. Third, we discuss the properties of the above mathematical expectation. Finally, we pose and discuss a simple optimization problem for our range manager.

How Does Bankruptcy Law Impact the Elderly's Business and Housing Decisions?

The elderly are the population most likely to file for bankruptcy, with filings increasing by 150 percent from 1991 to 2007. This is likely because they live with relatively flat incomes and high medical expenses, and their retirement and housing assets are typically exempt from bankruptcy filings. In addition, nine states adopted higher asset exemptions specifically for the elderly. Using the Health and Retirement Study and recent state-by-time variation in homestead exemptions, we are the first to test whether the benefits of partial wealth insurance or the cost of supply-side credit constraints are predominant for the elderly. Using pooled cross-sectional analysis, we find that an increase in a state’s homestead exemption increases the elderly’s home equity and business ownership; however, the credit constraint is dominant in unlimited-exemption states, which decreases home and business ownership. Panel analysis reveals that an increase in the homestead exemption positively affects home ownership rates and home equity.

The Effect of State and Local Sales Taxes on Employment at State Borders

This paper estimates the effect of sales taxes on employment at state borders using county-level quarterly data and a newly developed data set of local tax rates. Sales tax increases, relative to cross-border neighbors, lead to losses of employment, as well as payroll and hiring, but these effects are only found in counties with large shares of residents working in another state. The effects also represent an upper-bound, largely driven by employment shifting across the state border. We also find that employment in food and beverage stores is negatively affected when cross-border neighbors adopt low sales tax rates on food.

Food sales taxes and employment

We use panel fixed effects estimation with a border approach creating cross‐border county pairs to identify changes in food sales tax rates on employment, payroll, and hiring. Results suggest food sales taxes have a negligible effect on overall employment but adverse effects in the food and beverage stores industry. We find younger workers, who are more likely to work in the food and beverage industry, are more adversely affected when a neighboring state has preferential tax treatment for food. We also determine that omitting food sales tax rates when studying general sales tax effects on employment does not bias estimates.

The spillover effects of United States foreign trade zones

ABSTRACT This article empirically tests the geographic and economic spillover effects of foreign trade zones (FTZs) in the United States by utilizing propensity score matching and the geographic rules of the programme. While these FTZ sites are designed to support manufacturing, we find that ZIP codes that receive FTZ sites experience growth in new and existing non-manufacturing establishments. Our results also show that FTZs spillover into nearby ZIP codes. We find that ZIP codes that border FTZ ZIP codes also experience positive effects on non-manufacturing establishments and these spillovers are strongest within a 5-mile radius of an FTZ.

Book Review: Collaborative governance for urban revitalization: Lessons from empowerment zonesRichM. J.StokerR. P. (2014). Collaborative governance for urban revitalization: Lessons from empowerment zones. Ithaca, NY: Cornell University Press.

Over the past few decades poverty in America has become increasingly concentrated in urban areas. Policy makers at all levels of government have made urban issues a top priority in the fight against poverty and have implemented a number of strategies with place-based policies becoming prominent. The Obama administration has continued the trend with a number of new place-based initiatives such as Choice Neighborhoods, Promise Neighborhoods, and Sustainable Communities. With place-based policies playing such a significant role in addressing distressed areas, the book titled Collaborative Governance for Urban Revitalization is both important and timely. In 1994, six cities received Empowerment Zone (EZ) status and with it never-before-seen levels of federal resources, including wage tax credits and

Do spatially targeted redevelopment programs spillover

100 million grants, to revitalize their distressed areas. However, somewhat surprisingly local outcomes across these cities varied substantively despite being similar before the policy intervention. The authors Michael J. Rich and Robert P. Stoker investigate this puzzle and suggest that the quality of local governance is the key factor. They explain that collaborative governance “transcends local government by creating institutions that encourage key local stakeholders (inside and outside government) to make durable commitments to a revitalization agenda.” p.5 The role of collaborative governance in the success of public initiatives to revitalize distressed urban areas is difficult to determine because of the absence of meaningful examples to study. This book, however, provides compelling evidence that local governance, which incorporates the community, is a main determinant in a program’s success by studying the federal EZ initiative. The book begins by informing the reader of the history of government intervention aimed at alleviating urban blight. The focus on “supply-side” initiatives, such as tax relief and deregulation, came from the Reagan Administration and argued for less grant funding. President Clinton called for “comprehensive” empowerment zones, which expanded the benefits for EZs to include block grant funding as well as a focus on community-based approaches. Next, a broad description of good governance both in the United States and internationally is presented, including the competing neoliberal and collaborative governance perspectives on good governance. A collaborative governance approach complements neoliberal’s market-based policies with a focus on collaboration and community engagement to create local programs that can adjust to the local issues. Before investigating the importance of collaborative governance in the six cities, the book illustrates the circumstances and challenges of each city before the program by including an in-depth analysis of the demographic and economic characteristics. Additionally, there is analysis of each city’s approach and planning including discussion of specific programs. The detailed explanation of each city’s strategic planning process, drawing of EZ borders, and local uses of EZ funds highlight the different approaches. Some cities, such as Chicago and Detroit, focused on human services and housing, although New York focused on loan funding for local small businesses. The authors next describe and evaluate the quality of local government by assessing the local capacity, community participation, and program integrity of each city. Local capacity was evaluated by studying three leading indicators: strategies and system leadership, leadership and collaboration, and community development corporation capacity. Not only were there differences in community participation during the planning stages but some cities drastically reduced the community’s role during the implementation stage. This was particularly evident in the variation across the cities in community representation on the governing boards. This helped create important differences in the structures and processes to implement the EZ programs. For instance, Atlanta, Baltimore, and Detroit created “quasi-public, non-profit corporations” that were separate from local government, whereas Chicago and Philadelphia created structures within their local governments. Differences also existed across the cities in the appointment process, scope of authority of the entities, and who oversaw the entity, to name a few. The second half of the book uses quantitative and qualitative methods to evaluate the trends in the EZ cities, including 573296 EDQXXX10.1177/0891242415573296Economic Development QuarterlyBook Review research-article2015