REUTERS/Rebecca Cook - A Tesla S electric car and a charging station are displayed during the press preview day of the North American International Auto Show in Detroit, Michigan January 14, 2014.

Blog Post

If No End to Incentives for Jobs, then What?

September 28, 2014, Amy Liu and Owen Washburn

Nevada’s recent incentive package, valued at $1.25 billion, to bring Tesla’s battery production near Reno has reignited a longstanding debate about the merits of state and local economic development subsidies to attract or retain firms and whether to ban the practice all together. Let’s be honest: The ingrained practice of taxpayer-funded business recruitment has not lessened despite the mounting evidence that many incentives don’t actually pay off. The firms that receive incentives do not tend to generate more jobs than firms that don’t get them. And the overwhelming majority of state job growth comes from births of new establishments or expansion of existing establishments, not from firms moving to the state.

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