Assessing State Economic Development from Motion Picture and Television Production Incentives: Standardizing the Industry for Analysis

Rickman, Dan and Wang, Hongbo (2020): Assessing State Economic Development from Motion Picture and Television Production Incentives: Standardizing the Industry for Analysis.

Abstract

Studies of the economics of state fiscal incentives for the motion picture and television industry lack consistency in methodology. A key inconsistency is the use of differing levels of industry aggregation. This study unpacks aggregate sector multipliers for 48 states and shows how use of aggregated measures for the motion picture and television industry can lead to inaccurate input-output multipliers and empirical estimates of the role of incentives in the location of the industry. In practice, regional input-output models need to be modified to reflect the economic differences across activities in the aggregate sector, particularly for states that contain little of the targeted activity. A case study shows that a practical alternative is to use aggregate multipliers from similar states with large concentrations of the industry.

• Item Type: MPRA Paper
• Language: English
• Keywords: state film incenetives; input-output multipliers, economic development
• Subjects: H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H25 - Business Taxes and Subsidies; H - Public Economics > H7 - State and Local Government ; Intergovernmental Relations > H71 - State and Local Taxation, Subsidies, and Revenue; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R1 - General Regional Economics > R12 - Size and Spatial Distributions of Regional Economic Activity; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R5 - Regional Government Analysis > R58 - Regional Development Planning and Policy

References

Adkisson, Richard V., 2013. “Policy convergence, state film-production incentives, and employment: A brief case study,” Journal of Economic Issues 47, 445–54.

Bartik, Timothy J., Stephen C.Y. Biddle, Brad Hershbein and Nathan D. Sotherland, 2018. WholeData: Unsuppressed County Business Patterns Data: Version 1.0 [dataset]. Kalamazoo: W. E. Upjohn Institute for Employment Research.

Bartik, Timothy J. and Nathan Sotherland, 2019. Local job multipliers in the United States: Variation with local characteristics and with high-tech shocks, W.E. Upjohn Institute for Employment Research Working Paper 19-301.

Bradbury, J.C., 2019. “Can movie production incentives grow the economy? Evidence from Georgia and North Carolina,” https://dx.doi.org/10.2139/ssrn.3432035.

_____, 2020. “Do movie production incentives generate economic development?” Contemporary Economic Policy 38(2), 327-342.

Button, Patrick, 2018. “Can tax incentives create a local film industry? Evidence from Louisiana and New Mexico,” Journal of Urban Affairs doi:10.1080/07352166.2018.1530570.

_____, 2019. “Do tax incentives affect business location and economic development? Evidence from state film incentives,” Regional Science and Urban Economics 77, 315-339.

Camoin Associates, 2019a. Economic & Fiscal Impact Analysis of New York State Film Tax Credit Programs. https://esd.ny.gov/sites/default/files/Camoin_NYS-FilmReport-2017-18.pdf

_____, 2019b. Economic and Fiscal Impact of Louisiana Entertainment Tax Credits. https://louisianaentertainment.gov/docs/default-source/default-library/2019-economic-fiscal-impact-of-louisiana-entertainment-tax-credits.pdf

Christopherson, Susan and Ned Rightor, 2010. “The creative economy as ‘Big Business’: Evaluating state strategies to lure filmmakers,” Journal of Planning Education and Research 29(3), 336-352.

Christopherson, Susan, Maria C. Figueroa, Lois Spier Gray, James Parrott, Damone Richardson, and Ned Rightor, 2006. New York’s big picture: Assessing New York’s role in media production. August. https://www.researchgate.net/publication/327178217_NEW_YORK'S_BIG_PICTURE_Assessing_New_York's_Position_in_Film_Television_and_Commercial_Production

Ernst and Young, 2009. Estimated Impacts of the New York State Film Credit https://www.southwindsor-ct.gov/sites/southwindsorct/files/uploads/new_york_ernst_and_young_state_film_credit_study.pdf

Georgia Tech Center for Economic Development and Research, 2019. “The Economic Impact of the Film Industry in Georgia.”

Harris Richard I.D. and Aying Liu, 1998. “Input-output modeling of the urban and regional economy: The importance of external trade,” Regional Studies 32, 851- 862.

HR&A Advisors, Inc., 2012. “Economic and fiscal impacts of the New York State Film Production Tax Credit.” December 3, https://www.motionpictures.org/wp-content/uploads/2014/01/Economic-and-Fiscal-Impacts-of-the-New-York-State-Film-Production-Tax-Credit.pdf

Independent Fiscal Office, 2019. Pennsylvania film production credit: An evaluation of program performance. January 14, https://www.pafia.org/resources/Documents/TC_2019_Film_Production_Tax_Credit_Report.pdf

IO-Snap, 2019. Input-output state and national analysis program. https://www.io-snap.com/.

Isserman, Andrew M. and James Westervelt, 2006. “1.5 Million Missing Numbers: Overcoming Employment Suppression in County Business Patterns Data,” International Regional Science Review 29(3), 311–335.

Leiser, Stephanie, 2017. “The diffusion of state film incentives: A mixed-methods case study,” Economic Development Quarterly 31(3), 255-267.

Liu, Zhilin and Mildred E. Warner, 2009. “Understanding geographic differences in child care multipliers,” Journal of Regional Analysis and Policy 39(1), 71-85.

Loren C. Scott & Associates, Inc., 2017. The economic impact of Louisiana’s entertainment tax credit programs for film, live performance & sound recording. Louisiana Economic Development Website. Available online at https://louisianaentertainment.gov/docs/default-source/default-library/2017-entertainment-impact-study.pdf

Low, Sarah A. and Andrew M. Isserman, 2009. “Ethanol and the local economy: Industry trends, location factors, economic impacts, and risks,” Economic Development Quarterly 23(1), 71-88.

McDonald, Adrian, 2011. “Down the rabbit hole: The madness of state film incentives as a "solution" to runaway production,” Journal of Business Law 14, 85-165. Available online at: https://scholarship.law.upenn.edu/jbl/vol14/iss1/2.

MNP LLP, 2014. New Mexico film production tax incentive study: Phase I report. July 21, https://nmfilm.com/wp-content/uploads/2018/10/Phase-1-Report-Final-Report-July-21-2014.pdf

_____, 2016. New Mexico film production tax incentive study: Phase III report. July, https://nmfilm.com/wp-content/uploads/2018/10/MNP-Film-Study-Phase-III-20161.pdf.

National Conference of State Legislatures, 2018. “State Film Production Incentives and Programs.” Accessed at https://www.ncsl.org/research/fiscal-policy/state-film-production-incentives-and-programs.aspx

O’Brien, Nina F., and Christianne J. Lane, 2018. “Effects of economic incentives in the American film industry: an ecological approach,” Regional Studies 52(6), 865-875.

Owens, Mark F., and Adam D. Rennhoff, 2020. “Motion picture production incentives and filming location decisions: a discrete choice approach,” Journal of Economic Geography 20(3), 679-709.

Oxford Economics, 2017. Lights, camera but no action? A critical assessment of the methodological approach. https://www.oxfordeconomics.com/recent-releases/lights-camera-but-no-action

Popp, Anthony, and James Peach, 2008. The film industry in New Mexico and the provision of tax incentives. https://arrowheadcenter.nmsu.edu/wp-content/uploads/2015/06/filmindustryfinal.pdf

Rickman, Dan S., 2002. “A Bayesian forecast approach to constructing regional input-output based employment multipliers,” Papers in Regional Science 81, 483-498.

Rickman, Dan S., and R. Keith Schwer, 1995. “A comparison of multipliers of IMPLAN, REMI, and RIMS II: Benchmarking ready model for comparison,” Annals of Regional Science 29, 363-374.

Schaffer, William, 2020. The Web Book of Regional Science, Regional Research Institute, West Virginia University. https://researchrepository.wvu.edu/rri-web-book/7/

Schmit, Todd M., Becca B.R. Jablonski, and Yuri Mansury, 2016 “Assessing the economic impacts of local food system producers by scale: A case study from New York,” Economic Development Quarterly 30(4), 316-328.

Snead, Mark C., Dan S. Rickman, and Amy A. Jones, 2020. Oklahoma’s film and TV industry: Growth prospects and state-level incentives. July.

Swenson, Charles W., 2017. “Preliminary evidence on film production and state incentives,” Economic Development Quarterly 31, 65–80.

Tannenwald, Robert, 2010. State film subsidies: Not much bang for too many bucks. Center on Budget and Policy Priorities, December 9. https://www.cbpp.org/research/state-film-subsidies-not-much-bang-for-too-many-bucks

The PFM Group, 2016. State of Oklahoma Incentive Evaluation Commission Film Enhancement Rebate Program Final Report. November 28, https://iec.ok.gov/sites/g/files/gmc216/f/Film%20Incentive%20Rebate%20Final%20Evaluation_112817.pdf

Thom, Michael, 2018. “Lights, camera, but no action? Tax and economic development lessons from state motion picture incentive programs,” The American Review of Public Administration 48(1), 33-51.

_____, 2019. “Do state corporate tax incentives create jobs? Quasi-experimental evidence from the entertainment industry,” State and Local Government Review 51(2) 92-103.

Urban Land Institute, 2020. State and Local Finance Data. https://state-local-finance-data.taxpolicycenter.org/pages.cfm

Wassmer, Robert W., Ryan S. Ong, and Geoffrey Propheter, 2016. “Suggestions for the needed standardization of determining the local economic impact of professional sports,” Economic Development Quarterly 30(3), 252-266.

Weiner, Jennifer, 2009. State business tax incentives: Examining evidence of their effectiveness. New England Public Policy Center Discussion Paper 09-3.