Poland’s Special Economic Zones: Effects on Regional Economic Development

The paper presented in this ZEW Research Seminar studies Poland’s special economic zones (SEZs) established in 1995-1998, which attract investors through corporate income tax exemptions amounting to up to 70% of investment costs. Focusing on employment and wage responses at the municipal level in an event-study specification with staggered adoption spanning 1995-2016, the authors find a  17% increase in the employment rate of treated municipalities 10 years after SEZs establishment, and a  27% increase after 20 years. The mean effect of one more permit issued to an investor operating in a SEZ on the municipal employment rate is estimated at 2.2%.  It is found no effect on wages. While no employment spillovers are found for direct neighbors of SEZ municipalities, SEZs appear to boost employment in more faraway areas.