Fiscal Policies for Job Creation and Innovation: The Experiences of US States

Author(s): Robert S. Chirinko and Daniel J. Wilson

This paper reviews selected fiscal policy initiatives undertaken by US states to encourage job creation and innovation. We begin with a discussion of some general considerations about the design of tax policies summarized in a tax policy design table. Four policies are reviewed: job creation tax credits, research and development tax credits, a set of tax policies targeted to the biotechnology industry, and a broad set of tax policies that attract star scientists. The experiences at the state level are used to evaluate the effectiveness of these employment and knowledge-capital tax incentives in creating jobs and spurring innovation. The paper concludes with four other considerations need to be taken into account in selecting policies.

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Article Citation

Chirinko, Robert S, and Daniel J. Wilson. 2023. "Fiscal Policies for Job Creation and Innovation: The Experiences of US States ," Federal Reserve Bank of San Francisco Working Paper 2023-01. Available at https://doi.org/10.24148/wp2023-01