Film Tax Credits and Cross-Industry Employment Spillovers : Evidence from the Georgia Film and TV Tax Credit

Local governments are often willing to offer companies generous tax incentives to attract businesses to their region. In the United States, many states have tried to attract film productions and establish local film industries by offering different forms of state film tax incentives. As a prominent example of this, the state of Georgia offers a film tax credit which has no annual maximum compensation cap, creating an attractive tax environment for large film productions. The purpose of this study is to investigate if the Georgia state “Film, Television and Digital Entertainment Tax Credit” significantly affected film jobs in the state, and if any other industries were also affected through cross-industry employment spillovers. A difference in differences approach was used by way of the synthetic control case study method. This method estimates the counterfactual development of the outcome variable by creating a synthetic Georgia consisting of a weighted combination of untreated states. The results show a large and highly significant effect of the tax credit on film production jobs. However, little evidence of employment spillovers from the film industry is found, with only a select few affected industries being insurance and interior design. These results imply that tax incentives can establish a local film industry, but likely only if the annual maximum compensation is high or uncapped, making for a significantly more generous incentive than the average