Bartik provides a clear and concise overview of how state and local governments employ economic development incentives in order to lure companies to set up shop—and provide new jobs—in needy local labor markets. He shows that many such incentive offers are wasteful and he provides guidance, based on decades of research, on how to improve these programs.
The legitimate and illegitimate use of incentives in society today Incentives can be found everywhere—in schools, businesses, factories, and government—influencing people's choices about almost everything, from financial decisions and tobacco use to exercise and child rearing. So long as people have a choice, incentives seem innocuous. But Strings Attached demonstrates that when incentives are viewed as a kind of power rather than as a form of exchange, many ethical questions arise: How do incentives affect character and institutional culture? Can incentives be manipulative or exploitative, even if people are free to refuse them? What are the responsibilities of the powerful in using incentives? Ruth Grant shows that, like all other forms of power, incentives can be subject to abuse, and she identifies their legitimate and illegitimate uses. Grant offers a history of the growth of incentives in early twentieth-century America, identifies standards for judging incentives, and examines incentives in four areas—plea bargaining, recruiting medical research subjects, International Monetary Fund loan conditions, and motivating students. In every case, the analysis of incentives in terms of power yields strikingly different and more complex judgments than an analysis that views incentives as trades, in which the desired behavior is freely exchanged for the incentives offered. Challenging the role and function of incentives in a democracy, Strings Attached questions whether the penchant for constant incentivizing undermines active, autonomous citizenship. Readers of this book are sure to view the ethics of incentives in a new light.
Governments often use direct subsidies or tax credits to encourage investment and promote economic growth and other development objectives. Properly designed and implemented, these incentives can advance a wide range of policy objectives (increasing employment, promoting sustainability, and reducing inequality). Yet since design and implementation are complicated, incentives have been associated with rent-seeking and wasteful public spending. This collection illustrates the different types and uses of these initiatives worldwide and examines the institutional steps that extend their value. By combining economic analysis with development impacts, regulatory issues, and policy options, these essays show not only how to increase the mobility of capital so that cities, states, nations, and regions can better attract, direct, and retain investments but also how to craft policy and compromise to ensure incentives endure.
Policies targeting individual companies for economic development incentives, such as tax holidays and abatements, are generally seen as inefficient, economically costly, and distortionary. Despite this evidence, politicians still choose to use these policies to claim credit for attracting investment. Thus, while fiscal incentives are economically inefficient, they pose an effective pandering strategy for politicians. Using original surveys of voters in the United States, Canada and the United Kingdom, as well as data on incentive use by politicians in the US, Vietnam and Russia, this book provides compelling evidence for the use of fiscal incentives for political gain and shows how such pandering appears to be associated with growing economic inequality. As national and subnational governments surrender valuable tax revenue to attract businesses in the vain hope of long-term economic growth, they are left with fiscal shortfalls that have been filled through regressive sales taxes, police fines and penalties, and cuts to public education.
Derek Neal writes that economists must analyze public education policy in the same way they analyze other procurement problems. He shows how standard tools from economics research speak directly to issues in education. For mastering the models and tools that economists of education should use in their work, there is no better resource available.--
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