In this paper, we study the impact of a French enterprise zones program—the “Zones Franches Urbaines ” (ZFUs) policy—on establishments ’ location decisions. Our empirical analysis is based on a micro-geographic dataset which provides exhaustive information on the location of establishments in France over the period 2000-2007 at the census block level. We use a difference in difference approach combining spatial and time differencing. We also do triple difference estimations, using the fact that targeted urban areas have been selected in different waves over time. Finally, we exploit a discontinuity in the eligibility criteria of the policy as an exogenous source of variation to estimate the impact of the treatment. Our results show that the French ZFU policy has a positive and sizable impact on location choices. However, we also find that the policy mostly generates displacement effects, in particular through relocation of firms from the un-treated to the treated part within municipalities. Finally, the impact is shown to be highly heterogeneous across zones, firms and industries. The overall cost of moving establishments within municipalities is relatively high.

Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Preliminary and incomplete -do not cite without permission. Terms of use: Documents in EconStor may This version: August 7, 2015 Abstract. Although being heavily analyzed and discussed, there is neither a theoretical nor an empirical consensus on the incidence of the property tax in rental markets. In this paper, we suggest a novel theoretical approach by introducing property taxation into a Rosen-Roback type local labor market model. Besides the standard relative elasticity result, we find that the tax incidence depends on location preferences. The advantageous institutional setting of property taxation in Germany enables us to test our theoretical predictions and provide a clean estimate of the tax incidence using a non-parametric event study research design. Using a panel of German municipalities over more than 20 years, we show that in the short run, the incidence is borne by landlords since housing supply is inelastic. As housing supply becomes more elastic over time, landlords are able to shift the burden onto tenants. After six years, net rents are on the pre-reform level, implying full shifting of the tax.