Fiscal Zoning, Sales Taxes, and Employment: Do Higher Sales Taxes Lead to More Jobs in Retailing and Fewer Jobs in Manufacturing?

45 Pages Posted: 10 Mar 2012

See all articles by Daria Burnes

Daria Burnes

affiliation not provided to SSRN

David Neumark

University of California, Irvine - Department of Economics; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Michelle J. White

University of California, San Diego (UCSD) - Department of Economics; National Bureau of Economic Research (NBER)

Abstract

We test the hypothesis that local government officials in jurisdictions that have higher local sales taxes are more likely to use fiscal zoning to attract retailing. We find that total retail employment is not significantly affected by local sales tax rates, but employment in big box and anchor stores is higher significantly in jurisdictions with higher sales tax rates. This suggests that local officials in jurisdictions with higher sales tax rates concentrate on attracting large stores and shopping centers. We also find that the effect of local sales taxes on big box and anchor store retail employment is larger in county interiors, where residents tend to be captive to local retailers. Finally, fiscal zoning has the opposite effect on manufacturing employment, suggesting that local officials' efforts to attract shopping centers and large stores crowd out manufacturing.

Keywords: fiscal zoning, sales taxes, retail employment, manufacturing employment

JEL Classification: R3, R5, J2, H2

Suggested Citation

Burnes, Daria and Neumark, David and White, Michelle J., Fiscal Zoning, Sales Taxes, and Employment: Do Higher Sales Taxes Lead to More Jobs in Retailing and Fewer Jobs in Manufacturing?. IZA Discussion Paper No. 6383. Available at SSRN: https://ssrn.com/abstract=2019435

Daria Burnes (Contact Author)

affiliation not provided to SSRN ( email )

No Address Available

David Neumark

University of California, Irvine - Department of Economics ( email )

3151 Social Science Plaza
Irvine, CA 92697-5100
United States
949-824-8496 (Phone)
949-824-2182 (Fax)

HOME PAGE: http://www.socsci.uci.edu/~dneumark/

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Michelle J. White

University of California, San Diego (UCSD) - Department of Economics ( email )

9500 Gilman Drive
La Jolla, CA 92093-0508
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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