Can Movie Production Incentives Grow the Economy? Evidence from Georgia and North Carolina
35 Pages Posted: 8 Aug 2019
Date Written: August 4, 2019
Most US states have adopted movie production incentives with the intention to stimulate state economic growth through film industry investment and related economic activity. Previous cross-state studies of film incentives have not identified a stimulus effect; however, the zero-sum nature of interstate competition to attract business through targeted incentives complicates the identification of economic effects. If benefits accrue only to the few states offering the greatest incentives, then the impact might not be evident through interstate comparisons. This study uses the synthetic control method to examine the economic impact of relatively large film tax credit and grant subsidies offered by Georgia and North Carolina. Both states experienced lower per capita income than expected after implementing film incentives, indicating that economic benefits did not accrue to the winners of this economic incentives arms race.
Keywords: economic development policy, tax incentives, tax credits, film industry, movie production incentives, synthetic control method
JEL Classification: H25, H71, L82, R11, R38, Z11, Z18
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