This dissertation looks at the effect of state tax differentials on the geographic distribution of manufacturing plants. The location decisions of single-establishment firms and branch plants are modelled separately. For sixteen 2-digit SIC industries and for all manufacturing together, establishment level data are used to estimate the effects of state economic characteristics on plant location. The results vary widely across industries. In general, however, existing economic activity and distance to market are found to have the greatest effect on plant location. While state income tax levels appear to reduce slightly the probability of branch plant location, no evidence is found that state taxes influence startup rates for single-establishment plants. The data provide some support for the hypothesis that the effect of state economic characteristics on plant location depends not only on the production technology of the industry, but also on the character of the industry's output market.
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