Business Location Decisions in the United States: Estimates of the Effects of Unionization,Taxes, and Other Characteristics of States

This article examines how corporate decisions about the location for a new manufacturing plant in the U.S. are influenced by unionization, taxes, and other characteristics of states. The conditional logit model is used with some modifications to make the model more applicable to the business location decision. The most important finding is that the union sympathies of states have a major effect on business location. The results also indicate that state taxes affect business location, contradicting the conventional wisdom in the economic literature, although the tax effect is of modest magnitude.