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Empowerment Zones, Neighborhood Change and Owner Occupied Housing

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  • Krupka, Douglas J.

    (University of Michigan)

  • Noonan, Douglas S.

    ()
    (Georgia Tech)

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 more willing to pay 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 indirect effects in a simultaneous equations setting, compares indirect and full 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.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3320.

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Length: 41 pages
Date of creation: Jan 2008
Date of revision:
Handle: RePEc:iza:izadps:dp3320

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Keywords: sorting; economic development; empowerment zones; porperty values; household mobility;

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References

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Citations

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Cited by:
  1. Givord, Pauline & Rathelot, Roland & Sillard, Patrick, 2013. "Place-based tax exemptions and displacement effects: An evaluation of the Zones Franches Urbaines program," Regional Science and Urban Economics, Elsevier, Elsevier, vol. 43(1), pages 151-163.
  2. Hanson, Andrew, 2009. "Local employment, poverty, and property value effects of geographically-targeted tax incentives: An instrumental variables approach," Regional Science and Urban Economics, Elsevier, Elsevier, vol. 39(6), pages 721-731, November.
  3. Hanson, Andrew & Rohlin, Shawn, 2013. "Do spatially targeted redevelopment programs spillover?," Regional Science and Urban Economics, Elsevier, Elsevier, vol. 43(1), pages 86-100.
  4. Krupka, Douglas J. & Noonan, Douglas S., 2009. "Neighborhood Dynamics and the Housing Price Effects of Spatially Targeted Economic Development Policy," IZA Discussion Papers 4308, Institute for the Study of Labor (IZA).
  5. Dempsey, Judith A. & Plantinga, Andrew J., 2013. "How well do urban growth boundaries contain development? Results for Oregon using a difference-in-difference estimator," Regional Science and Urban Economics, Elsevier, Elsevier, vol. 43(6), pages 996-1007.
  6. Bondonio, Daniele, 2009. "Impact identification strategies for evaluating business incentive programs," POLIS Working Papers, Institute of Public Policy and Public Choice - POLIS 129, Institute of Public Policy and Public Choice - POLIS.

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