**Table 9. Within-sector effects with heterogeneous central excise tax incentives** **<u>(2013, town-sector level)</u>**

||||Log (employ|ment)||||
|---|---|---|---|---|---|---|---|
||(1)<br>40 kms|(2)<br>50 kms|(3)<br>60 kms|(4)<br>70 kms|(5)<br>80 kms|(6)<br>90 kms|(7)<br>100 kms|
|_Target_|0.2015<sup>***</sup><br>(4.78)|0.1493<sup>***</sup><br>(4.01)|0.2160<sup>***</sup><br>(6.11)|0.1971<sup>***</sup><br>(6.16)|0.2003<sup>***</sup><br>(6.75)|0.2337<sup>***</sup><br>(8.37)|0.2636<sup>***</sup><br>(9.91)|
|_Target X Treat_|0.4415<sup>**</sup>|0.5734<sup>***</sup>|0.5862<sup>***</sup>|0.6092<sup>***</sup>|0.6477***|0.6446<sup>***</sup>|0.6280<sup>***</sup>|
||(2.78)|(4.12)|(4.53)|(5.14)|(5.74)|(6.04)|(6.10)|
|_Distance_|0.0025<sup>*</sup>|-0.0016<sup>*</sup>|0.0013|-0.0004|-0.0011<sup>**</sup>|-0.0008<sup>**</sup>|-0.0001|
||(2.28)|(-2.04)|(1.88)|(-0.83)|(-2.90)|(-2.63)|(-0.42)|
|_Distance X Target_|0.0006|0.0032<sup>*</sup>|0.0000|0.0003|-0.0004|-0.0020<sup>**</sup>|-0.0033<sup>***</sup>|
||(0.32)|(2.24)|(0.02)|(0.33)|(-0.45)|(-3.00)|(-6.01)|
|_Distance X Treat_|-0.0045|-0.0003|-0.0011|0.0007|0.0024|0.0026<sup>*</sup>|0.0029<sup>**</sup>|
||(-1.10)|(-0.11)|(-0.47)|(0.42)|(1.75)|(2.31)|(3.03)|
|_Distance X Target_|-0.0066|-0.0145<sup>**</sup>|-0.0140<sup>**</sup>|-0.0144<sup>***</sup>|-0.0146<sup>***</sup>|-0.0142<sup>***</sup>|-0.0133<sup>***</sup>|
|_X Treat_|(-0.92)|(-2.72)|(-2.99)|(-3.63)|(-3.94)|(-4.33)|(-4.35)|
|_Constant_|2.4411<sup>***</sup>|2.5018<sup>***</sup>|2.4350<sup>***</sup>|2.4682<sup>***</sup>|2.4798<sup>***</sup>|2.4687<sup>***</sup>|2.4446<sup>***</sup>|
||(82.26)|(98.15)|(102.22)|(119.59)|(134.34)|(144.05)|(150.95)|
|_No. of observations_|11984|14248|16223|18215|20296|22356|24547|
||||Log (total fi|rms)||||
||(1)|(2)|(3)|(4)|(5)|(6)|(7)|
||40 kms|50 kms|60 kms|70 kms|80 kms|90 kms|100 kms|
|_Target_|-0.0214|-0.0570<sup>*</sup>|0.0001|-0.0220|-0.0275|-0.0070|0.0154|
||(-0.68)|(-2.07)|(0.00)|(-0.93)|(-1.27)|(-0.34)|(0.79)|
|_Target X Treat_|0.0270|0.0670|0.0822|0.0574|0.0938|0.0865|0.0734|
||(0.27)|(0.75)|(0.97)|(0.75)|(1.31)|(1.28)|(1.14)|
|_No. of observations_|11984|14248|16223|18215|20296|22356|24547|

_Note:_ All regressions include a _constant_ , and a linear function of _Distance_ . All standard errors are heteroskedastic robust. _t_ statistics in parentheses.<sup>*</sup> _p_ < 0.05,<sup>**</sup> _p_ < 0.01,<sup>***</sup> _p_ < 0.001.

We note in the previous sections that central corporate income tax had a negative list as well. It can be argued that corporate income taxes are generally larger and because of these few sectors, our specification might capture the impact of both the central excise and the central corporate income tax incentives. To check to what extent this other negative list influences our results, we drop all four sectors that are among the corporate tax exemptions negative list and re-conduct the analysis of Equ.(3). As an alternative check, we include these sectors as treated sectors. The results of both analyses are highly consistent with those reported in Table 9 and available upon request.

Another legitimate concern is on the impact of infrastructure investments and whether our estimates on tax incentives are biased upward because we do not control for these investments explicitly. The main argument favoring our approach is that we do not expect the impact of infrastructure investments to vary 28