In 2021, 6,384 businesses moved across state lines in the US, relocations make up less than 1% of new business establishments.
From 1994-2023 MO had a total net loss of 454 firms, or less than 16 per year.
Location decisions vary by firm and industry with different locations appealing to different businesses.
What are the considerations that would cause a business to leave Missouri for another state?
Businesses, or firms, must choose an initial location. Some also later relocate, requiring an additional location decision (Balbontin & Hensher 2019). Between 2-5% of firms move annually (Cary, Kleinman, Nimier-David 2025). Annually, relocations are less than 1% of new business establishments (Bureau of Labor Statistics (BLS) 2023). In 2021, across the country, 6,384 firms moved across state lines, almost double the 3,261 that migrated in 1994 (Bureau of Labor Statistics (BLS) 2023).
Some industries are more mobile than others, about 1% of, agriculture and related services moved in an average year, compared to about 5% of firms providing business services (Cary, Kleinman, Nimier-David 2025).
Businesses in the same industry sometimes find it advantageous to cluster in the same area. This concentration results in knowledge transfer
between firms, along with a more specialized labor force, particularly in knowledge intensive industries (Bolter & Robby 2020).
MO has concentrations of industries including finance and manufacturing, especially manufacturing transportation equipment (Personal communication Pinkerton 2025, MO Department of Higher Education and Workforce Development 2024).
Public policy can play a role in location decisions. States offer tax credits, grants and other incentives to encourage businesses. In the relatively mobile TV and Film industry, incentives brought between at most 1.5 additional TV series (Button 2019). However, these incentives did not translate to increases in feature films, wages, or employment. States with right to work policies have a greater share of people working in manufacturing (Holmes 1989). More recent research found a decline in unionization, an increase in workers working more than 45 hours a week, but no impact to employment or average wages (Gihleb et al. 2024, Eren & Ozbeklik 2016).
Tax policy can also play a role. In one study, a single percentage point increase in corporate taxes led to a 0.5% decline in the number of establishments. That decrease was equal parts firm movement and reduction of establishments. (Giroud and Rauh 2019).
If there are several economically feasible locations, non-economic factors may play a role (Dixit et al 2019). These can include a location’s reputation, identity, or simply how it feels to be there.
In 2021, the Midwest census region (IA, IL, IN, KS, MI, MN, MO, ND,NE,OH, SD, WI) had a net outmigration of 154 firms (BLS 2023). Most firms that left the region (57%) migrated to the South census region (AL, AR, DC, DE, FL, GA, KY, LA, MD, MS, NC, OK, SC, TN, TX, VA, WV). Missouri had a greater net outmigration of firms relative to its neighboring states (BLS 2023, Figure 1).
Texas gained 103,000 jobs, more than any other state in the time period from business relocations between 2010 and 2019, primarily in
manufacturing and professional and business services (Orrenius et al. 2024). In comparison to other states, Texas has:
In addition, Texas offers an incentive fund that provides cash grants to large companies that choose Texas over another state (Texas Office of the Governor 2023).
MO shares some of these qualities, it has a low cost of living, low energy costs, and a centralized location that makes it easier to move goods around the country (Personal communication Pinkerton, 2025, Missouri Partnership n.d.). Taxes are also relatively low. MO is ranked 13th in the 2025 State tax competitiveness index, ahead of all of its neighboring states except for TN (Yuskov et al. 2024).
Figure 1. Net migration of firms for MO and neighboring states in 2019-2023. Positive numbers indicate firms net firm movement to that state, negative indicate firm movement away. Data from Bureau of Labor Statistics 2024.
References
Balbontin C, Hensher D (2019) Firm-specific and location-specific drivers of business location and relocation decisions. Transport Reviews.34: 569-588. https://www.tandfonline.com/doi/full/10.1080/09654313.2015.1048186?src=recsys
Bolter K, Robey J (2020) Agglomeration Economies: A Literature Review. W.E. Upjohn Institute. https://research.upjohn.org/cgi/viewcontent.cgi?article=1256&context=reports
Bureau of Labor Statistics (BLS) (2023) Firm migrations in the United States: Magnitude and trends. United States Department of Labor. https://www.bls.gov/opub/mlr/2023/article/firm-migrations-in-the-united-states-magnitude-and-trends.htm
Bureau of Labor Statistics (2025) In 2023, more firms migrated to Florida on net than any other state. United States Department of Labor. https://www.bls.gov/opub/ted/2024/in-2023-more-firms-migrated-to-florida-on-net-than-any-other-state.htm
Button P (2019) Do Tax Incentives Affect Business Location and Economic Development? Evidence from State Film Incentives. NBER. https://www.nber.org/papers/w25963
Carry P, Kleinman B, Nimier-David E (2025) Location Effects or Sorting Evidence from Firm Relocation. NBER. https://www.nber.org/papers/w33779
Department of Higher Education & Workforce Development (2024)
Dixit A, Clouse C, Turken N (2019) Strategic Business Location Decisions: Importance of Economic Factors and Place Image. Rutgers Business Review. 4(1): 73-91. https://rbr.business.rutgers.edu/sites/default/files/documents/rbr-040106.pdf
Eren O, Ozbeklik S (2016) What Do Right-to-Work Laws Do? Evidence from a Synthetic Control Method Analysis. Journal of Policy Analysis and Management. 34(1): 173-194. https://onlinelibrary.wiley.com/doi/epdf/10.1002/pam.21861
Gihleb R, Giuntella O, Tan J (2024) The impact of right-to-work laws on long hours and work schedules. Journal of Policy Analysis and Management. 43 696-713. https://onlinelibrary.wiley.com/doi/abs/10.1002/pam.22562
Giroud X, Rauh J. (2019) State Taxation and the Reallocation of Business Activity: Evidence from Establishment-Level Data. Journal of Political Economy. 127(2): 1262-1316. https://www.journals.uchicago.edu/doi/abs/10.1086/701357
Holmes TJ (1998) The Effect of State Policies on the Location of Manufacturing: Evidence from State Borders. Journal of Political Economy. 106(4): 667-705. https://www.journals.uchicago.edu/doi/abs/10.1086/250026
Missouri Partnership (n. d.) Low Business Costs. https://missouripartnership.com/why-missouri/low-business-costs/
Orrenius P, Pranger A, Zavodny M, Parra O (2024) Hang your hat in Texas: State remains a leader in firm relocations. Federal Reserve Bank of Dallas. https://www.dallasfed.org/research/swe/2024/swe2402
Peltzman S (2016) State and local fiscal policy and growth at the border. Journal of Urban Economics. 95: 1-15. https://www.sciencedirect.com/science/article/abs/pii/S0094119016300201
Pinkerton Jeff (2025) Missouri Department of Economic Development. Personal Communication.
Yuskov A, Walczak J, Loughhead K. (2024). 2025 State Tax Competitivness Index. Tax Foundation. https://taxfoundation.org/research/all/state/2025-state-tax-competitiveness-index/
