Can Tax Incentives Create a Local Film Industry? Evidence from Louisiana and New Mexico

Area of Science:

• Economics
• Public Policy
• Film Studies

Background:

• State Film Incentives (SFIs) are increasingly utilized as economic development tools.
• Their effectiveness in fostering local film industry growth remains a subject of debate and requires empirical investigation.

Purpose of the Study:

• To quantitatively assess the impact of State Film Incentives on the motion picture industry.
• To determine the specific effects of SFIs on filming location, business establishments, and employment.

Main Methods:

• Utilized the synthetic control case study method, as introduced by Abadie et al. (2010).
• Analyzed data from IMDb, Studio System, and the Quarterly Census of Employment and Wages for Louisiana and New Mexico.

Main Results:

• Observed a statistically significant increase in feature film production in states with SFIs.
• Found no significant impact on TV series production, industry employment, or the number of business establishments.
• Indicated that SFIs may attract specific types of production but do not broadly develop a film industry ecosystem.

Conclusions:

• State Film Incentives demonstrate a limited capacity to foster comprehensive local film industry development.
• While effective in increasing feature film production, SFIs do not appear to stimulate broader economic growth within the motion picture sector.