{"id":6640,"date":"2019-07-15T08:17:08","date_gmt":"2019-07-15T13:17:08","guid":{"rendered":"https:\/\/affiliate.wcu.edu\/csfe\/?p=6640"},"modified":"2020-11-11T20:20:30","modified_gmt":"2020-11-12T01:20:30","slug":"what-do-film-incentives-mean-for-the-north-carolina-economy","status":"publish","type":"post","link":"https:\/\/affiliate.wcu.edu\/csfe\/2019\/07\/15\/what-do-film-incentives-mean-for-the-north-carolina-economy\/","title":{"rendered":"What Do Film Incentives Mean for the North Carolina Economy?"},"content":{"rendered":"

[et_pb_section fb_built=”1″ admin_label=”Section” _builder_version=”3.22.3″ collapsed=”off”][et_pb_row _builder_version=”3.26.1″][et_pb_column type=”4_4″ _builder_version=”3.26.1″][et_pb_text _builder_version=”4.4.6″]<\/p>\n

What Do Film Incentives Mean for the North Carolina Economy?<\/h1>\n

John Charles Bradbury, Ph.D.<\/h2>\n

Kennesaw State University<\/h3>\n

Volume 2, Issue 1<\/strong><\/p>\n

[\/et_pb_text][\/et_pb_column][\/et_pb_row][et_pb_row column_structure=”1_2,1_2″ _builder_version=”3.26.1″][et_pb_column type=”1_2″ _builder_version=”3.26.1″][et_pb_image src=”https:\/\/affiliate.wcu.edu\/csfe\/wp-content\/uploads\/sites\/61\/2019\/07\/IB-Film.jpg” _builder_version=”3.26.1″][\/et_pb_image][\/et_pb_column][et_pb_column type=”1_2″ _builder_version=”3.26.1″][et_pb_text _builder_version=”3.27.4″]<\/p>\n

Click the Button Below to Download a PDF Version of this Issue Brief<\/p>\n

[\/et_pb_text][et_pb_button button_url=”https:\/\/affiliate.wcu.edu\/csfe\/wp-content\/uploads\/sites\/61\/2019\/07\/Bradbury_MPI_v3.pdf” url_new_window=”on” button_text=”Download PDF” button_alignment=”center” _builder_version=”3.26.1″ custom_button=”on” button_text_size=”28px” button_text_color=”#c1a875″ button_bg_color=”#592c88″ button_border_radius=”20px” background_layout=”dark” animation_style=”zoom”][\/et_pb_button][\/et_pb_column][\/et_pb_row][et_pb_row _builder_version=”3.25″ collapsed=”off”][et_pb_column type=”4_4″ _builder_version=”3.25″ custom_padding=”|||” custom_padding__hover=”|||”][et_pb_text _builder_version=”3.27.4″ hover_enabled=”0″ sticky_enabled=”0″]Executive Summary<\/strong><\/p>\n

Since 2000, North Carolina has spent more than $400 million to subsidize movie production through grants and tax credits. Proponents of the subsidies argue that the expenses are offset by the economic development they generate; however, in recent years, several states have scaled back or ended their film-incentive programs because of concerns about cost and efficacy. This issue brief summarizes the existing research on the economic impact of film incentives as it relates to North Carolina. Studies consistently find little to no economic impact, and there is little evidence to indicate North Carolina\u2019s incentives generate a positive impact for the state that justifies their expense.
\n[\/et_pb_text][\/et_pb_column][\/et_pb_row][et_pb_row _builder_version=”3.25″ custom_padding=”14.5625px|0px|14px|0px|false|false” collapsed=”off”][et_pb_column type=”4_4″ _builder_version=”3.25″ custom_padding=”|||” custom_padding__hover=”|||”][et_pb_text admin_label=”Text” _builder_version=”3.27.4″]Introduction<\/strong><\/p>\n

In the late 1990s, several states began offering tax incentives to encourage movie-production companies to film in their respective states. The incentives were implemented with the intent to attract a new industry that would bring additional spending and jobs to the state economy. The hope was that film production would also stimulate economic activity in complementary industries\u2014such as construction, transportation, hospitality, and tourism\u2014and thus the economic effects would ripple through the state\u2019s economy and foster economic growth.<\/p>\n

Since 1997, forty-four states have offered film incentives for the purpose of stimulating local economic development. Though the incentives vary by state, they typically refund a percentage of in-state film-production expenditures through tax credits or grants. The subsidies lower production costs and thus make filming in the state more attractive. While these programs are expensive, supporters argue that film production generates economic activity that more than covers the cost of the subsidies.<\/p>\n

\u00a0<\/strong><\/p>\n

A Brief History of North Carolina\u2019s Film-Incentive Programs<\/strong><\/p>\n

North Carolina was an early adopter of film incentives. In 2000, it created the Film Industry Development Account to provide grants to production companies that filmed in the state. The initial law provided an annual grant of up to 15 percent of direct spending for movie productions, capping grants at $200,000 per production. The legislation also allowed production companies to use state property for free, and television and other video productions were also eligible for the grant.[1]<\/a>Though the available subsidies were small by present standards, at the time no neighboring state offered any incentives, and North Carolina was one of only six states in the country offering such incentives.[2]<\/a><\/p>\n

In 2005, North Carolina switched to a refundable tax-credit program, with credits equal to 15 percent of direct spending on film projects of $250,000 or more, and significantly increased the maximum subsidy to $7.5 million per production.[3]<\/a>The refundable feature of the tax credit allowed film companies to recover costs beyond their tax liability directly from the state.[4]<\/a>By this time, using incentives to lure filmmakers had become a popular policy initiative across the country\u2014 a majority of states would offer film incentives by 2006. Also in 2005, North Carolina\u2019s southern neighbor Georgia began its aggressive pursuit of the film industry with an uncapped tax-credit program. After initially offering tax credits of 9 to 12 percent of expenditures, the state increased its credits to 20 to 30 percent in 2008. In 2010, in the midst of the growing arms race of incentives, North Carolina increased its tax credit to 25 percent of in-state spending and raised the allowable subsidy to $20 million per film.[5]<\/a><\/p>\n

In 2014, the state scaled back its incentives by allowing its tax-credit program to sunset and adopting a smaller and budget-constrained grant-based incentive program. The state continued to offer grants of 25 percent of film-production spending, but it lowered the maximum per-film reimbursement to $5 million, limited subsidy eligibility to projects spending a minimum of $5 million, and allocated only $10 million per year to fund the grants. In 2015, the state increased grant funding to $30 million; it then stabilized program funding with $31 million in recurring funds going forward in 2017.[6]<\/a>In 2018, the maximum funding per film increased to $9 million and the in-state expenditure requirement was lowered to $3 million.[7]<\/a><\/p>\n

Table 1 reports by year the grants and credits approved in the state, using data from the Department of Revenue\u2019s annual report on economic incentives. Since 2005, North Carolina has approved more than $400 million in subsidies for film production. The state\u2019s most generous subsidies were offered from 2012 to 2014 under its tax-credit program.[8]<\/a>Though subsidies declined with the moderation of incentives in 2014, in recent years funding has increased as the state has become more liberal with its grant requirements and limitations: lowering expenditure minimums, raising per-film subsidy caps, expanding the grant budget, and eliminating the grant program\u2019s impending sunset date.[9]<\/a><\/p>\n

Table 1. NC Tax Credits and Grants to Film Industry (2005\u201318)<\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
Year<\/td>\nGrant\/Credit Payout<\/td>\n<\/tr>\n
2005<\/td>\n$229,871<\/td>\n<\/tr>\n
2006<\/td>\n$10,668,976<\/td>\n<\/tr>\n
2007<\/td>\n$17,554,297<\/td>\n<\/tr>\n
2008<\/td>\n$11,538,071<\/td>\n<\/tr>\n
2009<\/td>\n$7,701,758<\/td>\n<\/tr>\n
2010<\/td>\n$9,331,955<\/td>\n<\/tr>\n
2011<\/td>\n$32,635,573<\/td>\n<\/tr>\n
2012<\/td>\n$84,779,742<\/td>\n<\/tr>\n
2013<\/td>\n$63,457,840<\/td>\n<\/tr>\n
2014<\/td>\n$66,011,257<\/td>\n<\/tr>\n
2015<\/td>\n$39,305,197<\/td>\n<\/tr>\n
2016<\/td>\n$5,000,000<\/td>\n<\/tr>\n
2017<\/td>\n$23,399,791<\/td>\n<\/tr>\n
2018<\/td>\n$33,041,025<\/td>\n<\/tr>\n
<\/td>\n<\/td>\n<\/tr>\n
Total<\/td>\n$404,655,352<\/td>\n<\/tr>\n
Average<\/td>\n$28,903,954<\/td>\n<\/tr>\n
Source: North Carolina Department of Revenue,<\/td>\n<\/tr>\n
Economic Incentives Reports<\/em>, various years<\/td>\n<\/tr>\n
https:\/\/www.ncdor.gov\/news\/reports-and-statistics\/film-credits-and-grants<\/a><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/strong><\/p>\n

Studies of Film Incentives in Other States<\/strong><\/p>\n

The widespread use of film incentives across states has allowed researchers to study their economic impact. The earliest studies of the efficacy of film subsidies were conducted by state agencies and focused on the return on investment through taxes. The tax dollars going out (in grants) or not coming in (because of tax credits) were compared to new tax revenue from economic activity generated by the film industry. If the return on investment was positive because of the increased industry activity, that meant each dollar spent on film subsidies generated more than a dollar for the state government. However, studies tended to find a negative return on investments (less than one dollar) in film subsidies. Missouri estimated its return was between eleven and nineteen cents per dollar spent.[10]<\/a>A report for Maryland estimated that a dollar of its film incentives generated a return of ten cents\u2014six cents to the state and four cents to local governments\u2014and recommended allowing the program to sunset.[11]<\/a>Studies by state agencies in Connecticut, Louisiana, Michigan, Rhode Island, and Wisconsin also indicated their states\u2019 programs were generating negative returns.[12]<\/a>A recent comprehensive cost-benefit analysis of all state film-incentive programs by economists Mark Owens and Adam Rennhoff found the returns to be negative for every state, with the average return being twenty-seven cents per dollar of state expenditure. This analysis included North Carolina, for which the authors estimated that the return was twenty-two cents on the dollar.[13]<\/a><\/p>\n

Researchers have also examined the effect of incentives on location, employment, industry agglomeration, and economic output. Because the incentives lower the cost of filming, production companies are expected to film in states with better incentives and thus hire more workers and generate more economic activity.<\/p>\n

As for location, incentives do not appear to be a strong driver of where films are produced or promote a more permanent film industry. Economist Patrick Button found that while some types of film production increased with incentives, the incentives were not associated with the development of a significant film industry.[14]<\/a>Similarly, while Owens and Rennhoff found that the incentives attracted some productions, they failed to find strong evidence that they created a more permanent movie industry.[15]<\/a><\/p>\n

Nor does it appear that film incentives have a strong effect on film employment. Button found some employment effects, but described the estimates as \u201cvery small\u201d and \u201cweak.\u201d[16]<\/a>Accountant Charles Swenson found that incentives were effective at increasing film-sector employment in New York and California (states with already-large film sectors), but not in other states.[17]<\/a>Political scientist Michael Thom found that incentives were not associated with film-industry employment, output, or concentration; although, industry workers may have experienced a small temporary wage boost.[18]<\/a>Thom also looked specifically at California\u2019s film-incentive program and found no impact on employment in the industry.[19]<\/a>Economist Richard Adkisson similarly found no employment effects in the film industry. He concluded, \u201cUltimately, it seems that whatever states invested in this effort was largely for naught.\u201d[20]<\/a><\/p>\n

If film incentives do not have much impact on the film industry itself, it indicates that subsidizing filmmaking is likely an unproductive channel for\u00a0 growing state economies. However, it is possible that film incentives\u00a0stimulate economic activity in related industries, which could translate into further spending to boost income and employment throughout the state\u2019s economy. To investigate this possibility, I examined the performance of state economies with and without film subsidies, looking at the existence, type, and size of the subsidies offered. I found a few instances of potentially positive impacts of incentives on the film industry, but even in these instances the relationship was not particularly strong, and most estimates indicated no effect. Overall, film incentives were not associated with the size and growth of state economies.[21]<\/a><\/p>\n

In summary, researchers do not find film incentives to be strongly correlated with film-industry activity, size, stability, or employment in states. Furthermore, film incentives do not appear to boost state economies. The findings are consistent across many studies using a variety of empirical methods, which indicates a strong academic consensus that film incentives are impotent as an economic -development tool.<\/p>\n

\u00a0<\/strong><\/p>\n

North Carolina\u2019s Economic Experience<\/strong><\/p>\n

Though the evidence from other states does not support the claim of strong economic impacts from film incentives, perhaps North Carolina has some unique characteristics that make it particularly suitable for movie production (e.g., geography, economy, infrastructure) and translate into economic growth. A few studies have focused directly on the state\u2019s experience, and the findings are similar to those in other states.<\/p>\n

In 2013, North Carolina General Assembly\u2019s Fiscal Research Division analyzed the state\u2019s film tax-credit program, which Pew Charitable Trusts described as a \u201crigorous assessment of the program\u2019s economic impact.\u201d[22]<\/a>Using data from 2011, the Fiscal Research Division estimated that the tax credits likely attracted between 55 and 70 jobs and increased economic output by $7 million. Using the value of tax credits issued, that translates to a return of twenty-three cents on the dollar, similar to Owens and Rennhoff\u2019s estimates reported above.[23]<\/a>To assess the opportunity cost of funds used to subsidize film projects, the report estimated that using those funds to reduce business taxes across the board would have added between 290 and 350 new jobs and increased output by $45 million. Thus, by the state\u2019s own analysis, subsidizing the film industry was a relatively poor use of resources.<\/p>\n

The report also examined the effect of the film credits on film-industry employment in the state by comparing the credits\u00a0claimed and industry employment by year. If film credits are a key driver of industry employment, then the two variables should be positively correlated. However, the results did \u201cnot point to a particularly strong connection.\u201d[24]<\/a>Figure 1 updates this comparison to run from 2005 to 2018 and confirms that tax credits and film-industry employment were not positively correlated during the longer timeframe.[25]<\/a>While credits may motivate some filming in North Carolina, it appears that production companies are choosing to film in the state for other reasons as well. Thus, the subsidies went to production companies without generating many jobs.<\/p>\n

 
\n[\/et_pb_text][et_pb_text _builder_version=”3.27.4″ hover_enabled=”0″ sticky_enabled=”0″]Figure 1. Film Credits and Employment in North Carolina
\n[\/et_pb_text][et_pb_image src=”https:\/\/affiliate.wcu.edu\/csfe\/wp-content\/uploads\/sites\/61\/2019\/07\/chart.png” _builder_version=”3.24.1″][\/et_pb_image][et_pb_text _builder_version=”3.27.4″]In 2014, a group of local North Carolina film commissions and the Motion Picture Association of America (MPAA) commissioned a study to examine the economic impact of the state\u2019s film incentives.[1]<\/a>The study reached a rather different conclusion.[2]<\/a>It estimated that every dollar of tax credit provided by the state generated $1.52 in tax revenue, which would be a strong positive return on investment. However, the state\u2019s Fiscal Research Division reviewed the study and offered a highly critical response that described the estimate as \u201cincorrect.\u201d The agency concluded, \u201cthe reported positive return on investment is based on a series of misunderstandings of the State\u2019s tax laws, invalid or overstated assumptions, and errors in accounting.\u201d[3]<\/a>The commissioned study used the cost of credits already paid out during the fiscal year (as reported by the Department of Revenue) rather than the state\u2019s total liability for the credits approved, which the state reimburses with a lag. By doing so, it understated the cost of the credits by nearly 30 percent. The agency also noted that when estimating the benefits, the report relied on several dubious assumptions regarding effective tax rates, spousal wages, and employee travel to produce the optimistic result. After accounting for these and other errors, the Fiscal Research Division offered a corrected estimate that North Carolina\u2019s tax credits generated a return of sixty-one cents on the dollar to state and local government, which is higher than other estimates but still negative.<\/p>\n

In summary, studies of North Carolina\u2019s film incentives have not demonstrated the strong positive returns claimed by their proponents. These findings are consistent with analyses of film incentives in other states by state agencies and academic researchers.<\/p>\n

 <\/p>\n

A Counterfactual Analysis<\/strong><\/p>\n

 <\/p>\n

An obvious question to ask is \u201cWhat would North Carolina\u2019s economy look like without its film subsidies?\u201d Economists have recently developed tools to answer such counterfactual questions. Using an empirical procedure known as the synthetic control method, we can compare the actual outcomes that follow policy implementation with what would likely have happened if the policies had never been adopted. The counterfactual comparison is constructed from states with similar characteristics that did not adopt the policy. Economist Patrick Button used this method to examine the impact of film incentives in Louisiana and New Mexico\u2014two prominent early adopters of film incentives\u2014and found some increased filming but no impact on film-industry employment and business establishments .[4]<\/a><\/p>\n

I employ the synthetic control method to examine how adopting film incentives affected North Carolina\u2019s economy, as measured by income per capita. If film subsidies generate economic growth as claimed, then North Carolinians\u2019 income should have increased after the state\u2019s film-subsidy programs took effect. I use several relevant economic characteristics of similar states that lack film incentives to construct a \u201csynthetic\u201d North Carolina, which provides a counterfactual estimate of how the state economy might have performed absent its film incentives.[5]<\/a><\/p>\n

Figure 2 maps the income per capita of North Carolina in reality in comparison to that in the counterfactual. From 1990 to 1999, prior to the state\u2019s first film-grant program, incomes nearly overlap, indicating that the variables used to create the counterfactual estimate are appropriate. After 2000, the actual and synthetic economies diverge, with North Carolina\u2019s actual performance falling below its synthetic counterpart. The comparison suggests that North Carolina\u2019s economy was not improved by its film incentives and that it may be worse off. This finding should not be surprising given the consistent lack of efficacy found in other studies. Though this comparison is somewhat speculative, it is yet another\u00a0 example where film incentives are not associated with a positive economic impact.<\/p>\n

 <\/p>\n

[1]<\/a>The MPAA is a film industry advocacy group that represents the five major Hollywood studios and Netfilx.<\/p>\n

[2]<\/a>Handfield (2014).<\/p>\n

[3]<\/a>McHugh and Boardman (2014).<\/p>\n

[4]<\/a>Button (in press).<\/p>\n

[5]<\/a>See the appendix for further details on this empirical method and estimates.<\/p>\n

 
\n[\/et_pb_text][et_pb_text _builder_version=”3.27.4″]Figure 2. Per Capita Income of North Carolina with and without Film Incentives
\n[\/et_pb_text][et_pb_image src=”https:\/\/affiliate.wcu.edu\/csfe\/wp-content\/uploads\/sites\/61\/2019\/07\/Picture1.png” _builder_version=”3.24.1″][\/et_pb_image][et_pb_text _builder_version=”3.27.4″]Conclusion<\/strong><\/p>\n

North Carolina has pursued the film industry with subsidies to foster economic growth. However, studies of the impact of film incentives on North Carolina and other states\u2019 economies consistently find that film incentives are not associated with improved economic outcomes. Cost-benefit analyses estimate that North Carolina\u2019s return on investment from its film subsidies ranges from twenty-two to sixty-one cents on the dollar, with most estimates closer to the lower end of that range. These North Carolina estimates are consistent with the estimates of negative returns in other states. Academic studies on film subsidies have found no positive impact on the film industry or on the overall economy, indicating strong consensus that film incentives are ineffective for generating economic development. In summary, North Carolina\u2019s film incentives, which have cost the state over $400 million, do not appear to have delivered the promised economic boost. For this reason, policy makers may wish to reconsider the state\u2019s commitment to the incentives.<\/p>\n

 <\/p>\n

 <\/p>\n

 
\n[\/et_pb_text][\/et_pb_column][\/et_pb_row][et_pb_row column_structure=”3_5,2_5″ admin_label=”Row” _builder_version=”3.25″ collapsed=”on”][et_pb_column type=”3_5″ _builder_version=”3.25″ custom_padding=”|||” custom_padding__hover=”|||”][et_pb_text _builder_version=”3.27.4″]About the Author<\/strong>
\n[\/et_pb_text][et_pb_text _builder_version=”3.27.4″]John Charles Bradbury is a professor of economics at Kennesaw State University and a faculty affiliate with the Bagwell Center for the Study of Markets and Economic Opportunity. He is a native of Charlotte, North Carolina, and still holds an affinity for the state where he grew up. E-mail: jcbradbury@kennesaw.edu<\/a>. Twitter: jc_bradbury.
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Further Reading<\/strong><\/p>\n

Readers can dive into the papers in the References list below, although some of these can be technical and highly detailed. For more accessible further readings, consider two options. First, the non-partisan National Conference of State Legislators provides updates on state film incentive programs across the United States.\u00a0 Its periodic reports include descriptions of current programs and policy trends. Its latest report, \u201cState Film Production Incentives and Programs<\/a>,\u201d (February 5, 2018) highlights the trend of states ending and scaling back their film incentive programs. Second, the Pew Charitable Trusts evaluated North Carolina\u2019s tax incentives in 2017 and noted that the General Assembly\u2019s Fiscal Research Division\u2019s analysis of its film incentive program, which showed a poor return on investment, was a \u201crigorous\u201d and \u201chigh-quality\u201d assessment. See Fact Sheet, \u201cNorth Carolina Tax Incentives Evaluation Ratings<\/a>\u201d (May 3, 2017).<\/p>\n

 <\/p>\n

 <\/p>\n

References<\/strong><\/p>\n

Adkisson, R. V. 2013. \u201cPolicy Convergence, State Film-Production Incentives, and Employment: A Brief Case Study,\u201d Journal of Economic Issues<\/em>47, pp. 445-54. https:\/\/www.tandfonline.com\/doi\/abs\/10.2753\/JEI0021-3624460218<\/a>.<\/p>\n

Bradbury, J. C. 2019. \u201cDo Movie Production Incentives Generate Economic Development?\u201d Working paper. https:\/\/papers.ssrn.com\/sol3\/papers.cfm?abstract_id=3155407<\/a>.<\/p>\n

Button, P. In press. \u201cCan Tax Incentives Create a Local Film Industry? Evidence from Louisiana and New Mexico,\u201d Journal of Urban Affairs<\/em>. https:\/\/www.tandfonline.com\/doi\/abs\/10.1080\/07352166.2018.1530570<\/a>.<\/p>\n

Button, P. 2019. \u201cDo Tax Incentives Affect Business Location and Economic Development? Evidence from State Film Incentives,\u201d Regional Science and Urban Economics <\/em>77, pp. 315-39. https:\/\/www.sciencedirect.com\/science\/article\/pii\/S0166046218300152<\/a>.<\/p>\n

Christopherson, S., and N. Rightor. 2010. \u201cThe Creative Economy as \u2018Big Business\u2019: Evaluating State Strategies to Lure Filmmakers,\u201d Journal of Planning Education and Research<\/em>29, pp. 336-52. https:\/\/journals.sagepub.com\/doi\/abs\/10.1177\/0739456X09354381<\/a>.<\/p>\n

Cox, J. B. 2009. \u201cWhen N.C. Couldn’t Sweeten Deal, the Mouse Walked,\u201d News & Observer<\/em>, June 9, 2009.<\/p>\n

Department of Legislative Services, Office of Policy Analysis. 2015. \u201cEvaluation of the Maryland Film Production Activity Credit.\u201d http:\/\/dls.maryland.gov\/pubs\/prod\/TaxFiscalPlan\/Evaluation-of-the-Maryland-Film-Production-Activity-Tax-Credit.pdf<\/a>.<\/p>\n

Handfield, R. 2014. \u201cA Supply Chain Study of the Economic Impact of the North Carolina Motion Picture and Television Industry.\u201d Report. https:\/\/wwwcache.wral.com\/asset\/news\/state\/nccapitol\/2014\/10\/10\/14064040\/NC_Film_Supply_Chain_Study_3.31.14.PDF<\/a>.<\/p>\n

McHugh, P. 2013. \u201cFilm Tax Credits.\u201d Fiscal Research Division, North Carolina General Assembly. Memo April 9 http:\/\/wwwcache.wral.com\/asset\/news\/state\/nccapitol\/2013\/08\/16\/12784762\/201308161256.pdf<\/a>.<\/p>\n

McHugh, P., and B. Boardman. 2014. \u201cPreliminary Review of Handfield Film Study.\u201d Fiscal Research Division, North Carolina General Assembly. Memo April 3. https:\/\/wwwcache.wral.com\/asset\/news\/state\/nccapitol\/2014\/10\/10\/14064037\/Review_of_Handfield_Film_Study_-_Rep_Catlin_1_.pdf<\/a>.<\/p>\n

Owens, M., and A. Rennhoff. In press. \u201cMotion Picture Production Incentives and Filming Location Decisions: A Discrete Choice Approach,\u201d Journal of Economic Geography.<\/em>https:\/\/academic.oup.com\/joeg\/advance-article-abstract\/doi\/10.1093\/jeg\/lby054\/5205905<\/a>.<\/p>\n

Oversight Division 2013. \u201cSunset Review: Film Production Tax Credit.\u201d Report for Missouri General Assembly. http:\/\/www.moga.mo.gov\/oversight\/Sunset_Reviews\/FilmProdTaxCred2013.pdf<\/a><\/p>\n

Pew Charitable Trusts 2017. \u201cHow States Are Improving Tax Incentives for Jobs and Growth.\u201d Report. May. https:\/\/www.pewtrusts.org\/en\/research-and-analysis\/reports\/2017\/05\/how-states-are-improving-tax-incentives-for-jobs-and-growth<\/a>.<\/p>\n

Swenson, C. W. 2017. \u201cPreliminary Evidence on Film Production and State Incentives,\u201d Economic Development Quarterly<\/em>31, pp. 65-80. https:\/\/journals.sagepub.com\/doi\/full\/10.1177\/0891242416674807<\/a>.<\/p>\n

Thom, M. 2018a. \u201cLights, Camera, but No Action? Tax and Economic Development Lessons from State Motion Picture Incentive Programs,\u201d American Review of Public Administration<\/em>48, pp. 33-51. https:\/\/journals.sagepub.com\/doi\/abs\/10.1177\/0275074016651958<\/a>.<\/p>\n

Thom, M. 2018b. \u201cTime to Yell \u2018Cut?\u2019 An Evaluation of the California Film and Production Tax Credit for the Motion Picture Industry,\u201d California Journal of Politics and Policy<\/em>10, pp. 1-20. https:\/\/escholarship.org\/uc\/item\/3rf6v988<\/a>.<\/p>\n

 <\/p>\n

Appendix<\/strong><\/p>\n

The per capita income for the synthetic North Carolina is estimated using the following characteristics: the state\u2019s private capital stock, per capita employment, the share of total earnings from agriculture, the share of total earnings from the federal government, the film industry\u2019s share of the state\u2019s economy, and income per capita in 1990, 1994, and 1999. The six states used for comparison that have never had active film-incentive programs are Delaware, Idaho (it approved a program but never funded it), Nebraska, New Hampshire, North Dakota, and South Dakota. State weights for the characteristics were generated using the synthetic control method developed by Abadie and Gardeazabal (2003) and furthered by Abadie, Diamond, and Hainmueller (2010) and Abadie, Diamond, and Hainmueller (2015). The weights generated for each state to estimate the synthetic North Carolina are listed in table A.1. The actual and synthetic values estimated for each variable are listed in table A.2 for comparison.<\/p>\n

Table A.1. State Weights for Synthetic North Carolina<\/p>\n\n\n\n\n\n\n\n\n\n
State<\/td>\nUnit Weight<\/td>\n<\/tr>\n
Delaware<\/td>\n0<\/td>\n<\/tr>\n
Idaho<\/td>\n0.531<\/td>\n<\/tr>\n
Nebraska<\/td>\n0.262<\/td>\n<\/tr>\n
New Hampshire<\/td>\n0.208<\/td>\n<\/tr>\n
North Dakota<\/td>\n0<\/td>\n<\/tr>\n
South Dakota<\/td>\n0<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

 <\/p>\n

Table A.2. <\/strong>Income Predictors for North Carolina<\/p>\n\n\n\n\n\n\n\n\n\n\n\n
Variables<\/td>\nReal<\/td>\nSynthetic<\/td>\n<\/tr>\n
ln (Net Private Capital Stock Per Capita (in Millions))<\/td>\n0.0400<\/td>\n0.0398<\/td>\n<\/tr>\n
Employment Per Capita<\/td>\n0.5891<\/td>\n0.5903<\/td>\n<\/tr>\n
Federal Government Earning (%)<\/td>\n0.0176<\/td>\n0.0224<\/td>\n<\/tr>\n
Agriculture (%)<\/td>\n0.0167<\/td>\n0.0361<\/td>\n<\/tr>\n
Film Industry (%)<\/td>\n0.0008<\/td>\n0.0008<\/td>\n<\/tr>\n
Income Per Capita (1990)<\/td>\n31.9610<\/td>\n32.4214<\/td>\n<\/tr>\n
Income Per Capita (1994)<\/td>\n33.7494<\/td>\n33.7643<\/td>\n<\/tr>\n
Income Per Capita (1999)<\/td>\n37.6539<\/td>\n37.9971<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/strong><\/p>\n

Appendix References<\/strong><\/p>\n

Abadie, A., A. Diamond, and J. Hainmueller. 2015. \u201cComparative Politics and the Synthetic Control Method,\u201d American Journal of Political Science<\/em>59, pp. 495\u2013510. https:\/\/onlinelibrary.wiley.com\/doi\/abs\/10.1111\/ajps.12116<\/a>.<\/p>\n

Abadie, A., A. Diamond, and J. Hainmueller. 2010. \u201cSynthetic Control Methods for Comparative Case Studies: Estimating the Effect of California\u2019s Tobacco Control Program,\u201d Journal of the American Statistical Association<\/em>105, pp. 493\u2013505. https:\/\/www.tandfonline.com\/doi\/abs\/10.1198\/jasa.2009.ap08746<\/a>.<\/p>\n

Abadie, A., and J. Gardeazabal. 2003. \u201cThe Economic Costs of Conflict: A Case Study of the Basque Country,\u201d American Economic Review<\/em>93, pp. 113-32. https:\/\/www.aeaweb.org\/articles?id=10.1257\/000282803321455188<\/a><\/p>\n

[\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section]<\/p>\n","protected":false},"excerpt":{"rendered":"

Since 2000, North Carolina has spent more than $400 million to subsidize movie production through grants and tax credits. Proponents of the subsidies argue that the expenses are offset by the economic development they generate; however, in recent years, several states have scaled back or ended their film-incentive programs because of concerns about cost and efficacy. This issue brief summarizes the existing research on the economic impact of film incentives as it relates to North Carolina.<\/p>\n","protected":false},"author":429,"featured_media":9871,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"on","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[54],"tags":[661],"class_list":["post-6640","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-issue-briefs","tag-issue-brief-nc-economy"],"_links":{"self":[{"href":"https:\/\/affiliate.wcu.edu\/csfe\/wp-json\/wp\/v2\/posts\/6640","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/affiliate.wcu.edu\/csfe\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/affiliate.wcu.edu\/csfe\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/affiliate.wcu.edu\/csfe\/wp-json\/wp\/v2\/users\/429"}],"replies":[{"embeddable":true,"href":"https:\/\/affiliate.wcu.edu\/csfe\/wp-json\/wp\/v2\/comments?post=6640"}],"version-history":[{"count":26,"href":"https:\/\/affiliate.wcu.edu\/csfe\/wp-json\/wp\/v2\/posts\/6640\/revisions"}],"predecessor-version":[{"id":11591,"href":"https:\/\/affiliate.wcu.edu\/csfe\/wp-json\/wp\/v2\/posts\/6640\/revisions\/11591"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/affiliate.wcu.edu\/csfe\/wp-json\/wp\/v2\/media\/9871"}],"wp:attachment":[{"href":"https:\/\/affiliate.wcu.edu\/csfe\/wp-json\/wp\/v2\/media?parent=6640"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/affiliate.wcu.edu\/csfe\/wp-json\/wp\/v2\/categories?post=6640"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/affiliate.wcu.edu\/csfe\/wp-json\/wp\/v2\/tags?post=6640"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}