Sectoral growth patterns at the metropolitan level: An evaluation of economic development incentives

Breandan O'Huallachain, Mark A. Satterthwaite

Research output: Contribution to journalArticle

59 Scopus citations

Abstract

Economic development incentives are much used and expensive, yet information on their effectiveness is scarce. This paper reports a regression analysis of employment growth in 37 disaggregated sectors across U.S. metropolitan areas in the time period 1977-1984. The results indicate that variation in taxes and subsidies are not related significantly to the location of either high-technology manufacturing or most services. Our results suggest, however, that enterprise zones and university research parks, which may be proxies for focused economic development programs, are associated with increased job growth. Nevertheless the strongest determinants of growth are localization and urbanization externalities, along with labor costs and skill factors. We hypothesize that localization economies operate through the reduction of information costs, especially those associated with firms' search behaviors for skilled labor forces.

Original languageEnglish (US)
Pages (from-to)25-58
Number of pages34
JournalJournal of Urban Economics
Volume31
Issue number1
DOIs
StatePublished - Jan 1992

ASJC Scopus subject areas

  • Economics and Econometrics
  • Urban Studies

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