Empowerment Zones, neighborhood change and owner-occupied housing

Regional Science and Urban Economics (Impact Factor: 1.01). 01/2009; 39(4):386-396. DOI: 10.1111/j.0042-7092.2007.00700.x
Source: RePEc

ABSTRACT This paper examines the effects of a generous, spatially targeted economic development policy (the federal Empowerment Zone program) on local neighborhood characteristics and on the neighborhood quality of life, taking into account the interactions amongst the policy, changes in neighborhood demographics and neighborhood housing stock. Urban economic theory posits that housing prices in a small area should increase as quality of life increases, because people will be willing to pay more to live in the area, but these changes in prices and quality of life will also affect the demographics of the population through sorting and the housing stock through reinvestment. Using census block-group level data, we examine how housing prices respond to the Empowerment Zone policy intervention. Changes in the other dimensions of neighborhood quality (demographics and housing stock characteristics) will also help determine the total -- or full -- effect on housing values of the policy intervention. This paper estimates these direct and full effects in a simultaneous equations setting, compares direct and indirect effects and examines the robustness of the effects to alternate estimation strategies. We find strong evidence for substantively large and highly significant direct price effects, while results suggest that the indirect effects are substantively small or even negative.

  • Source
    [Show abstract] [Hide abstract]
    ABSTRACT: This article examines the potential for location-based employment tax incentives to have a differential effect on establishment location and employment across industry sectors. The authors model the differential effect of the location-based federal Empowerment Zone (EZ) wage tax credit on equilibrium labor and total cost savings across industry sectors. The model guides the empirical work, as the authors test the effect of the program across industry sectors. The empirical analysis shows that location-based tax incentives have a positive effect on firm location in some of the industries their model predicts and a negative effect in industries that could be crowded out.
    Public Finance Review 03/2011; 39(2):195-225.
  • Source
    [Show abstract] [Hide abstract]
    ABSTRACT: Although business incentive programs of different forms have been the bulk of local economic development policies in many industrialized countries for more than the last three decades, evaluating their impact on employment or local economic growth outcomes remains a challenging task due to the persisting lack of randomized experiments and the presence of many confounding factors which affect firms and economic growth outcomes. Moreover, much of the recent advancements in the statistical program evaluation methodology applicable to non-experimental settings do not make any direct reference to the specificities posed by business incentive policies. This paper aims at offering some clear guidance on how to choose the appropriate focus of the evaluation, the policy relevant evaluation parameters and empirical impact identification strategies when applying statistical methods attempting to estimate how much of the different outcomes between treatment and control groups are attributable to the program/s being evaluated. Each methodological option discussed in the paper is linked to the different features of commonly implemented US and EU policies and to whether or not the analysis focuses on outcomes recorded at a firm-level or at the level of the geographic areas in which the assisted firms are located.
  • Source
    [Show abstract] [Hide abstract]
    ABSTRACT: ABSTRACT This paper examines how offering tax incentives in a local area affects the entry of new business establishments. We use the federal Empowerment Zone (EZ) program as a natural experiment to test this relationship. Using instrumental variables estimation, we find that the EZ wage tax credit is responsible for attracting about 2.2 new establishments per 1,000 existing establishments, or a total of 20 new establishments in EZ areas. New establishment growth is strongest in the retail (about 40 new establishments) and service (about five new establishments) sectors, and offset by declines or slower growth in other industries.
    Journal of Regional Science 07/2011; 51(3):427 - 449. · 2.00 Impact Factor

Full-text (3 Sources)

Available from
Jun 1, 2014