Lobbying

Economic Development Subsidies Create a Lot of Jobs—Mostly for Lobbyists

According to a newly published study, states that issued "extraordinarily large" economic development subsidies saw more lobbyists located in the state capital.

Joe Lancaster | 7.29.2026 4:40 PM

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State governments often argue that it's necessary to give subsidies to private companies to encourage economic development. In return, they say, those companies will make investments that create jobs.

"Unfortunately, these claims are largely unfounded," Russell S. Sobel, professor of economics at The Citadel, wrote in 2024. "There is now a large literature that examines the data and clearly brings into question the effectiveness and accountability of these programs, finding they do not lead to statistically significant improvements in tax revenue, employment, economic growth, or personal income."

A new study found that economic development subsidies actually do create jobs—specifically, in lobbying.

"Entrepreneurship is a key driver of economic growth, and governments actively promote policies aimed at fostering it," begins the study, published in the academic journal Small........

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