Leveraging Labor Markets Policies to Promote Local Employment Creation

This dissertation studies two common labor policy tools to promote local employment. The first chapter investigates the effects of local business tax incentives on local employment and the potential spillovers. I find that while counties offering incentives experience a boost in industry employment following the opening of the incented establishments, the magnitude of job creation is about half of what was promised. I also find evidence of employment spillovers through agglomeration at the county level, but the effect size is small, as evidenced by the reported small increase in firm entry and lack of impact on wage earnings. The second chapter of the dissertation studies the impact of reduced unemployment insurance (UI) benefits in the State of Florida on unemployment and exit behavior among those eligible for UI benefits. I find reducing unemployment benefits leads to a 1.1 percentage point decline in unemployment rate. However, there is no evidence of increase in tendency of exiting from unemployment among those eligible for UI benefits. The findings suggest that the two labor policy tools commonly used to promote local employment may require more scrutiny to improve the effectiveness of labor policies.