Do Targeted Business Subsidies Improve Income and Reduce Poverty? A Synthetic Control Approach
Jacob Bundrick and
Weici Yuan
Economic Development Quarterly, 2019, vol. 33, issue 4, 351-375
Abstract:
Interstate competition for economic development has led many states to adopt targeted economic development incentive programs known as deal-closing funds. Deal-closing funds allow state officials to provide discretionary cash grants to select businesses to attract and retain economic development projects. However, whether these targeted business subsidies increase prosperity in the local economy remains unclear. The authors use evidence from Arkansas’s Quick Action Closing Fund to analyze how effective deal-closing funds are at increasing incomes and decreasing poverty. Specifically, the causal effects of the Quick Action Closing Fund on Arkansas’s county-level per capita personal income and poverty rates are estimated using a synthetic control approach. The results largely suggest that the business subsidy program fails to increase incomes and lower poverty rates over the long term, at least at the county level. These findings should serve as a caution to policy makers who wish to improve incomes and poverty rates with targeted business subsidies.
Keywords: incentives; economic development policy; Quick Action Closing Fund (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/0891242419875502 (text/html)
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:sae:ecdequ:v:33:y:2019:i:4:p:351-375
DOI: 10.1177/0891242419875502
Access Statistics for this article
More articles in Economic Development Quarterly
Bibliographic data for series maintained by SAGE Publications ().