The Economic Perspective: “A New Look at Business Incentives”

I’m Mary Walden with economist MW welcoming you to the economic perspective. Today’s program examines a new look at business incentives. Mike, incentives are often used by states and localities to attract new businesses and jobs. However, they are controversial for a couple of key reasons.  First, they are often viewed as corporate giveaways.  And, second, there are questions about whether they are needed.  I understand there is a new study that particularly examines the second question.  Please summarize the results of the study.


Mike: Summary Answer

  • Unique aspect is it estimated whether incentive were key factor in decision
  • Study concluded – no – said in 85% of cases, if incentives had not been used by both winning and losing locations, final decision about location would have been the same
  • But exposes problem – if one state or location “disarms” and doesn’t lose incentives, can lose – need all to “disarm”
  • Difficult – best option is to put conditions related to job growth
  • I’m MW


Mary:  And I’m Mary Walden for the Economic Perspective, an NC State Extension program from the Department of Agricultural and Resource Economics.