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The effects of location-based tax policies on the distribution of household income: Evidence from the federal Empowerment Zone program

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  • Reynolds, C. Lockwood
  • Rohlin, Shawn M.

Abstract

Location-based tax policies are redistributive as evidenced by their placement in distressed areas. However, the previous literature has focused on mean effects which can mask important effects that the program has on the distribution of households. Therefore, we extend the literature by studying changes in the entire household income distribution, in the context of the federal Empowerment Zone (EZ) program. We do not find evidence that the impoverished residents benefited from the program. Our findings are consistent with the areas becoming more attractive to high-income households. The improvements in the areas were concentrated in those portions of each zone that were relatively better-off prior to EZ designation. The results confirm the prior literature findings that the areas, on average, became more attractive but also suggest that the benefits of the program likely did not accrue to the lower-income residents of the EZ areas.

Suggested Citation

  • Reynolds, C. Lockwood & Rohlin, Shawn M., 2015. "The effects of location-based tax policies on the distribution of household income: Evidence from the federal Empowerment Zone program," Journal of Urban Economics, Elsevier, vol. 88(C), pages 1-15.
  • Handle: RePEc:eee:juecon:v:88:y:2015:i:c:p:1-15
    DOI: 10.1016/j.jue.2015.04.003
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Neumark, David & Simpson, Helen, 2015. "Place-Based Policies," Handbook of Regional and Urban Economics, Elsevier.
    2. Neumark, David & Young, Timothy, 2017. "Government Programs Can Improve Local Labor Markets, But Do They? A Re-Analysis of Ham, Swenson, Imrohoro?lu, and Song (2011)," IZA Discussion Papers 11168, Institute of Labor Economics (IZA).
    3. Wenhua Di & Daniel L. Millimet, 2017. "Targeted business incentives and the debt behavior of households," Empirical Economics, Springer, vol. 52(3), pages 1115-1142, May.
    4. Bernini, Cristina & Cerqua, Augusto & Pellegrini, Guido, 2017. "Public subsidies, TFP and efficiency: A tale of complex relationships," Research Policy, Elsevier, vol. 46(4), pages 751-767.
    5. repec:eee:juecon:v:105:y:2018:i:c:p:149-161 is not listed on IDEAS
    6. Picarelli, Nathalie, 2016. "Who really benefits from export processing zones? Evidence from Nicaraguan municipalities," Labour Economics, Elsevier, vol. 41(C), pages 318-332.
    7. Neumark, David & Simpson, Helen, 2015. "Do place-based policies matter?," FRBSF Economic Letter, Federal Reserve Bank of San Francisco.
    8. Cobb-Clark, Deborah A. & Kettlewell, Nathan & Schurer, Stefanie & Silburn, Sven, 2018. "The Effect of Quarantining Welfare on School Attendance in Indigenous Communities," IZA Discussion Papers 11514, Institute of Labor Economics (IZA).
    9. repec:eee:jhecon:v:63:y:2019:i:c:p:114-127 is not listed on IDEAS

    More about this item

    Keywords

    Location-based policy; Distribution; Tax incentives; Household income;

    JEL classification:

    • D3 - Microeconomics - - Distribution
    • R2 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

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