Geographic redistribution of US manufacturing and the role of state development policy

Competition among state and local governments to lure businesses has attracted considerable interest from economists, as well as legislators and policy makers. This paper quantifies the role of plant relocations in the geographic redistribution of manufacturing employment and examines the effectiven...

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Bibliographic Details
Published in:	Journal of urban economics 2008-09, Vol.64 (2), p.436-450
Main Author:	Lee, Yoonsoo
Format:	Article
Language:	eng
Subjects:	Development policy Economic theory Employment Entry Entry Exit Relocation Tax incentive Exit Federal states Geographic distribution Industrial policy Location of industry Manufacturing Relocation Studies Tax incentive Tax incentives U.S.A
Online Access:	Get full text
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Summary:	Competition among state and local governments to lure businesses has attracted considerable interest from economists, as well as legislators and policy makers. This paper quantifies the role of plant relocations in the geographic redistribution of manufacturing employment and examines the effectiveness of state development policy. Only a few studies have looked at how manufacturing firms locate their production facilities geographically; they have used either small manufacturing samples or small geographic regions. This paper provides broader evidence of the impact of plant relocations using confidential establishment level data from the US Census Longitudinal Research Database (LRD), covering the full population of manufacturing establishments in the United States over the period from 1972 to 1992. This paper finds a relatively small role for relocation in explaining the disparity of manufacturing employment growth rates across states. Moreover, it finds evidence of very weak effects of incentive programs on plant relocations.
ISSN:	0094-1190 1095-9068