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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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number
3320.
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Leslie E. Papke, 1993.
"What Do We Know about Enterprise Zones?,"
NBER Chapters,
in: Tax Policy and the Economy, Volume 7, pages 37-72
National Bureau of Economic Research, Inc.
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