I estimate the impacts of recently-popular U.S. state film incentives on filming location, film industry employment, wages, and establishments, and impacts on related industries. I compile a detailed database of incentives, matching this with TV series and feature film data from the Internet Movie Database (IMDb) and Studio System, and establishment and employment data from the Quarterly Census of Employment and Wages and Country Business Patterns. I compare these outcomes in states before and after they adopt incentives, relative to similar states that did not adopt incentives over the same time period (a panel difference-in-differences).
Governments provide numerous incentives to encourage firms to choose their region for business or to spur economic development. These incentives vary, but location caterers common strategies include tax credits, grants, financing, enterprise and empowerment zones, and state taxation rates in general. These incentives are increasingly common, having more than tripled since 1990 (Bartik, 2017). An in-depth analysis by the New York Times found 1,874 incentive programs across the U.S., with a total cost of $80.4 billion per year.1 Bartik (2017) projects that, for the entire nation in 2015, state and local business incentives had an annual cost of $45 billion.
Studying the economic impacts of incentives is essential both because of their popularity, especially recently, but also because their effectiveness is still not fully known. Reviews of the literature by Wasylenko (1999), Buss (2001), and Arauzo-Carod et al. (2010) note that the effect of incentives on firm location and economic development is still ambiguous. Some studies find at least moderate positive effects of incentives on firm location
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