In this article published in the 'American Economic Review', IAB-researcher Adrian Lerche estimates the direct effects of investment tax credits on firms’ production behavior and the additional indirect effects arising from agglomeration economies. Using geolocation data, Adrian Lerche shows that agglomeration benefits lead to a sizable further firm production expansion, with these benefits materializing within distances of 5 kilometers.
- American Economic Review: Direct and Indirect Effects of Investment Tax Incentives
- First version of the article published as IAB-Discussion Paper 28/2022: Investment Tax Credits and the Response of Firms