Business Incentives



The economic development of a locality or region, and thus the condition of the labor market, depends on the attraction or retention of businesses. Incentives are a powerful policy lever to help attract or retain businesses. Incentives can take the form of financial assistance, business services, or tax incentives. The key question to answer with any of these tools is the extent to which public benefits compare to the public investment costs.


  • How do tax incentives, customized business services, or other incentives affect business location, expansion, and contraction decisions?
  • What are the local-labor market and land-market effects of any positive effects of business incentives on employment?
  • How can the effectiveness of incentives best be evaluated?
  • To what extent are incentives offered by states or localities a “zero-sum game” when viewed from a national perspective?
  • How effective are public incentive programs in terms of creating employment?

Selected Institute Research

An Analysis of the Employment Effects of the Washington High Technology Business and Occupation (B&O) Tax Credit
Timothy Bartik, Upjohn Institute
Kevin Hollenbeck, Upjohn Institute
Upjohn Institute Working Paper No. 12-187, June 2012

The Employment and Fiscal Effects of Michigan’s MEGA Tax Credit Program
Timothy Bartik, Upjohn Institute
George Erickcek, Upjohn Institute
Upjohn Institute Working Paper No. 10-164, April 2010

Reining in the Competition for Capital
Anne Markusen, University of Minnesota, editor
Upjohn Institute Press, 2007

“Solving the Problems of Economic Development Incentives”
Timothy Bartik, Upjohn Institute
Growth and Change 36(2): 139-166, 2005

More Institute Research about Business Incentives

Useful Links

Corporation for Enterprise Development (CFED)
Economic Development Administration (EDA)
International Economic Development Council (IEDC)
Minority Business Development Agency, U.S. Dept. of Commerce (MBDA)
National Women’s Business Council
Small Business Administration (SBA)