Tax Incentive Requests and Offers in a State Economic Development Program

This paper analyzes expansion, relocation, and new business projects in Ohio between 1993 and 1995 to determine the characteristics that influence a project’s probability of receiving a tax incentive from the state. Empirical results indicate that establishment size and age, high local wages, and high local air pollution levels decrease a project’s probability of receiving tax assistance from the state government. The number of new jobs promised by the business establishment and the size of the county labor force increase a project’s likelihood of receiving an incentive.