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.
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.