New Study on Film Incentives Finds Little Effect on Location, Jobs

November 19, 2019

Carine Martinez

Carine Martinez joined the Foundation in 2016 and is campaign director of Secure and Sovereign Texas and has been director of research and publications since 2021.

As campaign director, she oversees the Foundation’s initiative to look for additional and innovative policy solutions for the state of Texas to help secure its southern border.

As director of research and publications, she oversees and manages the publication schedules for all policy areas the Foundation is working on and is responsible for editing research publications.

Carine also conducted research on Texas–Mexico paradiplomacy, as well as, earlier on, on the effects on taxpayers and consumers of government programs that grant special privileges to certain businesses in the form of subsidies, tax credits, regulatory advantages, or other favors.

She is the co-editor of the Foundation’s Policymaker’s Guide to Corporate Welfare and is the author of several research publications, notably on film incentives, the hotel occupancy tax, and the three-tier system of alcohol distribution. She testified on these issues before the Texas Legislature during its 85th and 86th regular sessions. She was published in several newspapers including the Austin American-Statesman, The Hill, and Forbes.

Carine began working in public policy as a policy intern at the Foundation in 2014. She later worked as a policy analyst for Texas Action during the 84th Legislature and then spent a year in Washington, D.C., working as a research associate for the Charles Koch Institute.

She holds a bachelor’s degree in international business administration (completed in English, French, and Spanish) and a master’s degree in American studies from the Sorbonne in Paris, France.

Carine is originally from Paris, France, but happily moved to the United States in 2011 and finally to Texas in 2013. She became an American citizen in 2019.

A recent study on state film incentives (SFIs) examined their effects on filming location for TV series and feature films, employment, establishments, wages, and related industries—hotels, caterers, costumes, buildings, and transportation rentals.

The study’s results indicate that the taxpayer dollars handed out to TV and movie productions to generate economic development could have little to no effect:

“…while SFIs relocate TV series filming this increase in filming leads neither to the development of a local film industry nor to any meaningful spillovers to related industries. This means that SFIs do not achieve two of their primary goals: establishing a local film industry or creating economic development in general.”

The study’s author, Patrick Button, assistant professor of Economics at Tulane University, envisioned the study as an indicator of how efficient targeted economic incentives are in general. The film industry tends to be relatively insensitive to location relative to business and to local labor—importing most of the specialized labor needed, and it requires less capital investment than other industries. The focus then is on the cost of filming in any location. “This contrasts with firms in general who base business locations on a broader set of factors,” Button explains. Since SFIs are very common and generally aggressive, they should produce positive outcomes, if effective.

The study uses several large databases. Button created an up-to-date state film incentives database with the history and characteristics of SFIs (if any) in each state. Additionally, he used the Internet Movie Database (IMDb), proprietary industry database Studio System, Bureau of Labor Statistics’ Quarterly Census of Employment and Wages (QCEW), and County Business Patterns (CBP) data for motion picture production. He then looked at states that adopted SFIs before and after adoption, also using states that do not have SFIs as a comparison.

The study found SFIs appeared to positively influence the location of TV series, but the concrete repercussions remained small. For example, the study estimates few additional series overall. “In sum, there appears to be evidence of a large effect on TV series filming, although the evidence is not entirely robust.” Some of the possible positive outcomes are also observed mostly in states with already a medium or large film industry: “Put another way, it seems that states with existing industries that are small are not able to attract many positive benefits.”

The study found little to no evidence of SFIs influencing the location of feature films. For the Studio System database, there was “…some non-robust evidence o[f] a small effect on feature films, but even if this small effect exists it is not of a meaningful magnitude.” The study found no evidence of a change with the IMDb database.

Other possible sought-after outcomes—the creation of jobs and positive spillovers on other industries such as catering, building, or transportation rentals—could hardly be found. There was no strong evidence that SFIs increased wages or new construction. More broadly, “across all related industries, most of the evidence points towards no effects” that would benefit states that offered SFIs.

You can read the entire study and more details about its results and conclusions here. A related article was published in Regional Science and Urban Economics.

Other studies have reached similar conclusions. Yet the Texas Legislature decided last session to double the amount of taxpayer money allocated to the state film incentive program for the next two years. The program, instead, should be ended and the money left for taxpayers to spend as they see fit, be it at a movie theater or in any other way.

Carine Martinez

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