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Abstract
Many American states use firm-specific tax abatements in an attempt to attract and retain
businesses. Since approximately 1990, the "war among the states" for economic development has
intensified. This paper analyzes Ohio's job tax credit program using a state-level computable
general equilibrium (CGE) model that accounts for economic and fiscal flows within the Ohio
economy. The model also links Ohio and the rest-of-the-United States through labor market and
goods market flows. We estimate that net job creation due to the Ohio program is nine percent of
the number of promised new jobs if other states do not retaliate with similar tax abatement
programs. If other states retaliate, we estimate that Ohio's net employment will expand by less
than one percent of the promised new jobs and the state government deficit increases by $100
million annually.