| Abstract: | ABSTRACT In recent years, many states have raised the amount of resources they devote to economic development programs, particularly those providing direct monetary assistance to firms. However, scholarly attention to this topic has not kept pace and, as a result, relatively little is known about such policies' effectiveness. This paper examines the effectiveness of monetary incentives using Ohio's experience with such programs in the 1980s. Empirical results show that incentives are significantly related to employment and income growth at the county level. Grants are found to be more effective than loans, and capital subsidies to businesses more effective than either labor subsidies to businesses or capital subsidies to communities. Finally, resources given to creating jobs are more effective than resources for retaining or training existing workers. |
