Economic Development Incentives, Local Jurisdictions and Employment: Does Creating Jobs Result in More Jobs?

Abstract

In recent decades, state and local policy makers' role in fostering economic development and job creation within their jurisdictions has continuously become more active and expansive with local jurisdictions offering an array of economic incentives meant to attract and retain jobs, with tax increment financing (TIF) being one of the most popular of these incentives. In recent years some critics have questioned the incentives' efficacy, calling for greater oversight of their use and evidence of success at economic development and job creation. In response, the State of Missouri recently implemented reporting requirements for all Missouri TIF districts including, among other things, the number of jobs created and retained by each TIF district. However, the accuracy of these reported impacts depends on the extent to which the incentives draw new economic activity from outside the jurisdiction versus merely shifting existing activity from within the jurisdiction. This research studies the accuracy of the reported impact of TIF on job creation by examining how the number of jobs reported by local TIF agencies impacts the number of jobs in the jurisdiction as measured by the Bureau of Labor Statistics.