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Empowerment Zones, neighborhood change and owner-occupied housing

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  • Krupka, Douglas J.
  • Noonan, Douglas S.

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

Suggested Citation

  • Krupka, Douglas J. & Noonan, Douglas S., 2009. "Empowerment Zones, neighborhood change and owner-occupied housing," Regional Science and Urban Economics, Elsevier, vol. 39(4), pages 386-396, July.
    • Handle: RePEc:eee:regeco:v:39:y:2009:i:4:p:386-396
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    More about this item

    Keywords

    Economic development Empowerment Zones Property values Household mobility Sorting Local economic growth Tax incentives;

    JEL classification:

    • R0 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy

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