Economics Working Paper 21117

Abstract: This paper provides the most detailed and comprehensive data on relocations of California business headquarters between 2018 and 2021. We document that these headquarter exits have more than doubled in 2021. We discuss several economic factors that have led to these departures by raising business costs, reducing productivity, and reducing profitability, including tax policies, regulatory policies, labor costs, litigation costs, energy and utility costs, and concerns about a declining quality of life within the state. Unless policy reforms reverse this course, California will continue to lose businesses, both large established businesses, as well as young, rapidly growing businesses, some of which will become the transformational giants of tomorrow.

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