Dr. Bruce McDonald III will be visiting the University of Alabama Political Science Department on Wednesday, February 28th to give a talk in ten Hoor 346 from 1:30-2:00 pm.

Talk title: “You Don’t Always Get What You Want: The Effect of Financial Incentives on State Fiscal Health”

Abstract: The competition for economic expansion into the boundaries of a government are significant, as evidenced by the incentives offered to Amazon by state and local governments across North America. In exchange for locating Amazon’s HQ2 within their communities, governments offered tax breaks. Chicago, for example, offered at least $2 billion in incentives and Maryland and New Jersey have offered $5 billion and $7 billion, respectively. While having Amazon establish its new HQ2 within a community is expected to provide economic growth for the region, concern has been raised as to whether the governments can afford the financial incentives they have offered. This paper intends to address the issue of the financial incentives offered to businesses when they are making their location decisions through the perspective of affordability. Using a panel of 33 states from 1990 to 2015, we seek to address the question of how do the incentives offered by states effect their fiscal health. After controlling for the demographic, economic and political characteristics of each of the states, we expect that the new business locating in a state may produce an economic benefit, but this benefit is offset by the cost of the incentives to the governments overall condition.