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Teaching new markets old tricks: The effects of subsidized investment on low-income neighborhoods

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  • Freedman, Matthew

Abstract

This paper examines the effects of investment subsidized by the federal government's New Markets Tax Credit (NMTC) program, which provides tax incentives to encourage private investment in low-income neighborhoods. I identify the impacts of the program by taking advantage of a discontinuity in the rule determining the eligibility of census tracts for NMTC-subsidized investment. Using this discontinuity as a source of quasi-experimental variation in commercial development across tracts, I find that subsidized investment has modest positive effects on neighborhood conditions in low-income communities. Though spillovers appear to be small and crowd out incomplete, the results suggest that some of the observed impacts on neighborhoods are attributable to changes in the composition of residents as opposed to improvements in the welfare of existing residents.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Public Economics.

Volume (Year): 96 (2012)
Issue (Month): 11 ()
Pages: 1000-1014

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Handle: RePEc:eee:pubeco:v:96:y:2012:i:11:p:1000-1014

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Web page: http://www.elsevier.com/locate/inca/505578

Related research

Keywords: Place-based programs; Business incentives; Tax credits; Low-income neighborhoods; Regression discontinuity;

References

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Citations

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Cited by:
  1. David Neumark & Helen Simpson, 2014. "Place-Based Policies," NBER Working Papers 20049, National Bureau of Economic Research, Inc.
  2. Giulia Faggio, 2014. "Relocation of Public Sector Workers: Evaluating a Place-based Policy," SERC Discussion Papers 0155, Spatial Economics Research Centre, LSE.
  3. Briant, Anthony & Lafourcade, Miren & Schmutz, Benoît, 2013. "Can Tax Breaks Beat Geography? Lessons from the French Enterprise Zone Experience," CEPREMAP Working Papers (Docweb) 1316, CEPREMAP.
  4. Tong, Patricia & Zhou, Li, 2014. "The Impact of Place-Based Employment Tax Credits on Local Labor: Evidence from Tax Data," Working Papers 2014-6, University of Alberta, Department of Economics.
  5. Kline, Patrick & Moretti, Enrico, 2013. "People, Places and Public Policy: Some Simple Welfare Economics of Local Economic Development Programs," CEPR Discussion Papers 9741, C.E.P.R. Discussion Papers.
  6. Kaitlyn Harger & Amanda Ross, 2014. "Do Capital Tax Incentives Attract New Businesses? Evidence across Industries from the New Markets Tax Credit," Working Papers 14-14, Department of Economics, West Virginia University.

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