The Impact of Urban Enterprise Zones on Establishment Location Decisions: Evidence from French Zfus.

39 Pages Posted: 28 Oct 2013

See all articles by Thierry Mayer

Thierry Mayer

Sciences Po

Florian Mayneris

Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE)

Loriane Py

Banque de France

Date Written: October 2013

Abstract

In this paper, we study the impact of a French enterprise zones program -- the "Zones Franches Urbaines'" (ZFUs) policy -- on establishment location decisions. Our empirical analysis is based on a micro-geographic dataset that provides exhaustive information on the location of establishments in France over the period 2002-2007 at the census block level. Our identification strategy, which combines spatial and time differencing, assesses how the probability that an establishment locates in the ZFU area rather than in the non-ZFU area of a municipality changes after the implementation of the policy. We also implement double difference estimations, using the fact that targeted urban areas have been selected in different waves over time. Finally, we exploit a discontinuity in the eligibility criteria of the policy as an exogenous source of variation to estimate the impact of the treatment. We find that conditioning on locating in a municipality that hosts a ZFU, the policy has a positive and sizable impact on the probability to locate in the ZFU part rather than in the non-ZFU part of municipalities. However the impact is highly heterogeneous across zones, industries and firms. Moreover, we show that the policy mostly generates diversion effects within municipalities.

Keywords: Firm Location, Enterprise zones, Spatial and Time Differencing

JEL Classification: R12, R38, R5

Suggested Citation

Mayer, Thierry and Mayneris, Florian and Py, Loriane, The Impact of Urban Enterprise Zones on Establishment Location Decisions: Evidence from French Zfus. (October 2013). Banque de France Working Paper No. 458. Available at SSRN: https://ssrn.com/abstract=2346227 or http://dx.doi.org/10.2139/ssrn.2346227

Florian Mayneris

Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE) ( email )

34 Voie du Roman Pays
B-1348 Louvain-la-Neuve, b-1348
Belgium

Loriane Py

Banque de France ( email )

Paris
France

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