Measuring the Distribution of Economic Development Tax Incentive Intensity

The targeting of economic development incentives at distressed locations or particular industries is typically justified based on equity and efficiency grounds. However, existing empirical studies fail to fully explain the distribution of incentives in a region or state because they do not account for variations in the distribution of population or industries. This article contributes to the literature on the targeting of incentives in several important ways, using the example of Ohio. The distribution of economic incentives is examined using the intensity of incentives, which allows for examination of whether incentives are targeted to distressed locations or industries. Intensity of incentives is measured as the value or number of incentives weighted by the number of employees and firms in each location or industry. We find that policies are missing the mark if they are indeed intended to target areas of distress or particular industries.