Local Prior Employment and Ecosystem Dynamics

This article utilizes a unique database (PLACE, the PLatform for Advancing Community Economies) to explore relationships between founders’ prior work experiences and the outcomes of their entrepreneurial firms. The authors capture and compare multiple, intersecting, often overlapping, prior work experiences and assess their differential interactions within a local ecosystem. They augment existing empirical research, which has looked most closely at the impact of prior employment on firm financing and survival, to include labor market effects. Results show important differences in firm-level employment outcomes across prior work experiences, with an advantage accruing to founders with prior work experience in local life science firms.

Authors:
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Publication Date:
NSF-PAR ID:
10087833
Journal Name:
ILR Review
Volume:
72
Issue:
5
Page Range or eLocation-ID:
p. 1182-1199
ISSN:
0019-7939
Publisher:
SAGE Publications
2. This essay describes and evaluates state and local business tax incentives in the United States. In 2014, states spent between $5 and$216 per capita on incentives for firms in the form of firm-specific subsidies and general tax credits, which mostly target investment, job creation, and research and development. States with higher per capita incentives tend to have higher state corporate tax rates. Recipients of firm-specific incentives are usually large establishments in manufacturing, technology, and high-skilled service industries, and the average discretionary subsidy is \$178M for 1,500 promised jobs. Firms tend to accept subsidy deals from places that are richer, larger, and more urban than the average county, and poor places provide larger incentives and spend more per job. Comparing winning and runner-up locations for each deal, we find that average employment within the three-digit industry of the deal increases by roughly 1,500 jobs. While we find some evidence of direct employment gains from attracting a firm, we do not find strong evidence that firm-specific tax incentives increase broader economic growth at the state and local level.