Untargeted incentives and entrepreneurship: An analysis of local fiscal policies and small businesses in Florida

Abstract

This paper examines the effects of local taxes and local fiscal expenditures on small businesses in Florida. Our analysis sheds light on the linkage between small business development and local fiscal decisions, which seem to have no obvious or direct connection with targeted business assistance and incentives. Spatial panel regression models are calibrated with county-level tax, expenditure, and social and economic factors for the period of 2008-2013. The estimation results suggest that local tax and expenditure structure and decisions affect the number of small business establishments not only in their “home” counties but also in their neighboring jurisdictions.