<p>Entrepreneurship is a key driver of economic growth, and governments actively promote policies aimed at fostering it. However, these policies may also incentivize rent seeking by shifting relative economic returns from what is productive to what is not, accomplishing the very opposite of the stated intention. Leveraging 40,000 geocoded establishments in the lobbying industry from the National Establishment Time Series database, we explore how unproductive economic activity (proxied by lobbying-industry activity) changes in states after they award their first “extraordinarily large” business incentive. We find that, relative to states that have not awarded such incentives, establishment-level lobbying-industry employment increases by 3.6%, with larger effects in capital counties where lobbyist employment concentration expands significantly. In contrast to other studies that fail to find significant employment gains arising from economic development incentives, we do find them — but in lobbying and unproductive entrepreneurship.</p>