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Abstract

In 2003, Minnesota enacted a tax-free-zone economic development program, Job Opportunity Building Zone (JOBZ), that is of a longer term and more generous than most similar state programs. In this article, the authors analyze publicly available data on the new investments in capital and labor that Minnesota businesses report making in response to the program. The authors find that businesses signing deals in 2004 and 2005 reported creating 4,891 jobs and investing $768 million, with the reported activity varying significantly across the state. The number of jobs reportedly created represents less than 1% of Minnesota’s total nonfarm, private employment. The authors also combine the businesses’ reported data with county-level economic data and analyze how JOBZ-related investment is correlated with economic growth in each county. The authors find little evidence of JOBZ’s impact on county-level economic growth during the first 3 years of the program, but do find significant impacts of several workforce and demographic variables on county-level growth.

Keywords

tax incentives economic development employment subsidies capital subsidies

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