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California Economic Policy, Report · October 2005

Are Businesses Fleeing the State? Interstate Business Relocation and Employment Change in California

David Neumark, Junfu Zhang, and Brandon Wall

A commonly heard theme in recent public debates about California’s economic problems is that the state’s economy is hostile to the needs of business. As evidence, it is asserted that businesses are leaving the state in droves, taking Californians’ jobs. In reality, little is actually known about the trend of out-of-state business relocation. In this issue of California Economic Policy, the authors examine the phenomenon in a more complete context. They find that California does in fact lose businesses and jobs because of relocation, but the effect on employment is negligible.


Economic Growth Economic Trends Economy