New Federal Reserve Paper: State Corporate Taxes Hurt Entrepreneurship

Scott Drenkard:

The way the researchers compare policies is quite interesting. Their report uses the newly-constructed Quarterly Workforce Indicators (QWI) firm age dataset, which allows researchers to isolate effects on new versus established firms. It also has local granularity that enables a comparison of economic outcomes in states against adjoining border counties in other states.

In essence, this allows you to hold demographic and industrial characteristics constant (because you are examining areas right next to each other), while examining impacts of changes in policy in one place against another.