This paper studies the effects of the Lex Bonny, a major Swiss place-based industrial policy introduced to support economically distressed regions in the 1970s. Using newly assembled historical firm-level data, we examine how the policy affected firm dynamics across municipalities over time. We estimate a series of difference-in-differences and spatial difference-in-differences models that exploit both policy eligibility and distance to treated areas. The results show no evidence of differential pre-trends and reveal a positive and persistent increase in the stock of firms in treated municipalities. These effects emerge gradually after policy implementation and are driven primarily by higher firm entry, rather than reduced exit or relocation. Overall, the findings suggest that the Lex Bonny stimulated firm creations.

In this paper, we develop a general equilibrium spatial model to study the effects of place-based subsidies under monopsonistic competition. In our model, firms and workers are perfectly mobile across a continuum of communities. Firms are locally oligopolistic, facing the downward sloping supply curve in a given community. The incidence of place-based policy falls on workers, landlords, and firms, the last of which has been traditionally left out of place-based policy analysis. Our model produces three sufficient statistics to evaluate the effect of place-based subsidies: changes in worker wages, landlord rents, and firm profits. We take the model to the U.S. administrative tax microdata to understand the extent of imperfect competition within local communities designated federal Empowerment Zones (EZs). We go on to provide the first long-run estimate of the program on worker welfare and evaluate how these results vary based on the degree of wage markdowns in each EZ.

The federal Historic Tax Credit (HTC) is one of the largest and longest running place-based development subsidies in the United States. Yet despite its scale, there is little causal evidence on whether the HTC induces new investment or simply transfers rents to property owners. We assemble a novel, geocoded dataset linking completed historic preservation activity to detailed commercial property and neighborhood level data. We provide new descriptive evidence on the scale and spatial distribution of the HTC. We then leverage the Tax Cuts and Jobs Act (TCJA) of 2017, which reduced the value of the credit, to estimate the causal effect of the HTC on property tax values and local economic outcomes. Finally, we exploit a spatial exposure strategy comparing Census tracts that receive an HTC-funded rehabilitation project to adjacent tracts that do not. Overall, we find evidence that the HTC both transfers rents and generates neighborhood-level externalities.

When local governments' funding opportunities are linked to the local economy, changes in the import and export competition may influence the revenue that local governments can raise. This paper estimates the effect of trade shocks on German municipalities' fiscal outcomes for the period from 1992 to 2012. We find that increased exposure to import competition has a detrimental effect on municipality revenues and expenditures, while additional export opportunities lead to positive effects. The adjustment of expenditures importantly depends on municipalities' initial fiscal and economic conditions. Municipalities with a higher initial debt per capita predominantly react by adjusting their debt repayment. In contrast, municipalities with a low initial debt per capita are able to limit the negative impact of import competition on local public investment and substantially expand their investment when export opportunities arise.