Economic Development Incentives, Reported Job Creation, and Local Employment

Abstract

State and local policy makers continue to utilize and emphasize economic development incentives to attract and retain employers, with tax increment financing (TIF) being one of the more popular incentives. Recently, several states increased reporting requirements for local economic development agencies in an attempt to ensure that targeted incentives are achieving their stated objectives. However, the economic validity of these reported jobs depends heavily on the extent to which the incentives draw new economic activity into an area. In this paper, I examine the credibility of the number of jobs reported by local economic development agencies in Missouri as having been created or retained by TIF. The analysis studies the impact of these reported jobs on county employment, as measured by the Bureau of Labor Statistics. Results suggest that the number of jobs reportedly created by TIF districts do not significantly impact county employment.