DO HIGH-UNEMPLOYMENT STATES OFFER THE BIGGEST BUSINESS INCENTIVES - RESULTS FOR 8 STATES USING THE HYPOTHETICAL FIRM METHOD

This article provides a preliminary analysis of the spatial distributi on of business incentives across 8 states and 27 cities. A variation o n the ''hypothetical firm'' method is used to measure the size of tax and nontax incentives offered by those states and cities. The net pres ent value of after-tax income for a 20-year period is calculated for v arious types and sectors of firms in each state and city. This income, which measures the intensity of the incentive offer is then related t o state and city unemployment rates. The results suggest that high-une mployment cities (but not stares) do offer bigger incentives.