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Property Taxes and the Birth and Intraregional Location of New Firms

University of Maryland

The purpose of this paper is to identify conditions that encourage local entrepreneurship and to test whether local property tax rates and abatement pro grams influence the birth and intraregional location of new firms This paper tests a model of the location of new firms in the machine tool and electronic components industries in 106 counties in the states of New Jersey, Maryland, Virginia, and the District of Columbia. The findings indicate that property tax rates and the existence of a local tax abatement program do not influence the generation or location of new firms within the region Instead, there is evidence that wage rates, the size of the pool of potential entrepreneurs, localiza tion economies, distance from a labor force, and urbanization economies in a county influence where new firm births will occur

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