Local employment multipliers for large publicly subsidized firms: Evidence from a synthetic control approach |
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Authors: | Andrew Hanson Shawn Rohlin |
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Institution: | 1. Stuart Handler Department of Real Estate, University of Illinois at Chicago, Chicago, Illinois, USA;2. Department of Economics, Kent State University, Kent, Ohio, USA |
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Abstract: | This paper provides estimates of local employment multipliers from large, publicly subsidized firms. We use a synthetic control weighted difference-in-difference estimation procedure that matches treated areas with comparison areas to generate local employment multiplier estimates. We show that local employment multiplier estimates have a high degree of uncertainty, with a wide range of point estimates (both positive and negative) and varying degrees of statistical significance. There is a concentration of positive employment multipliers from manufacturing facilities, but little correlation between estimated multipliers and subsidy value. We demonstrate that our approach produces drastically different results than a traditional difference-in-difference approach. |
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Keywords: | employment multiplier firm location subsidy synthetic control |
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