Staff Report 205

The Effect of State Policies on the Location of Industry: Evidence from State Borders

Thomas J. Holmes | University of Minnesota, Federal Reserve Bank of Minneapolis

Revised September 1, 1996

This paper provides new evidence that state policies play a role in the location of industry. The paper classifies a state as pro-business or anti-business depending upon whether or not the state has a right-to-work law. The paper finds that, on average, there is a large abrupt increase in manufacturing activity when crossing a state border from an anti-business state into a pro-business state.

Published In: Journal of Political Economy (Vol. 106, No. 4, August 1998, pp. 667-705)

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