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Do local economic development programs work? Evidence from the Federal Empowerment Zone Program

Date Added to Library: 
Friday, January 4, 2013 - 11:07
Individual Author: 
Busso, Matias
Kline, Patrick
Reference Type: 
Place Published: 
New Haven, Connecticut
Published Date: 
February 2008
Published Date (Text): 
February 2008
Yale Economics Department Working Paper
Issue Number: 

This paper evaluates Round I of the federal urban Empowerment Zone (EZ) program, which constitutes one of the largest standardized federal interventions in impoverished urban American neighborhoods since President Johnson’s Model Cities program. The EZ program is a series of spatially targeted tax incentives and block grants designed to encourage economic, physical, and social investment in the neediest urban and rural areas in the United States. We use four decades of Census data on urban neighborhoods in conjunction with information on the proposed boundaries of rejected EZs to assess the impact of Round I EZ designation on local labor and housing market outcomes over the period 1994-2000. Utilizing a semi-parametric difference-in-differences estimator we find that neighborhoods receiving EZ designation experienced moderate improvements in labor market conditions and sizeable increases in owner-occupied housing values and rents relative to rejected and future Empowerment Zones. These effects were accompanied by small changes in the demographic composition of the neighborhoods, suggesting that some, though not all, of the observed improvements in EZ neighborhoods are the result of neighborhood churning. No evidence exists of large scale gentrification, indicating that many of the benefits (and costs) of the program have been captured by pre-existing residents. (author abstract)

This resource was also published as a working paper by the National Poverty Center at the University of Michigan.

Geographic Focus: 
Page Count: 
Research Notes: 
Both Nonexperimental and quasi-experimental. first part of the analysis is looking at the impact of EZ designation; then they use a quasi-control group to compare how those outcomes (RF and CW 1.25.13)

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