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Do spatially targeted redevelopment programs spillover?

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  • Hanson, Andrew
  • Rohlin, Shawn

Abstract

This paper estimates spillover effects from a spatially-targeted redevelopment program, the Federal Empowerment Zone (EZ), on neighboring and economically similar areas. EZs are a set of generous tax incentives and grants aimed at small, economically depressed areas of large U.S. cities. We find areas that border or are economically similar to EZ locations experience a decline in the number of establishments and employment compared to areas that border or are similar to rejected EZ applicants. We also demonstrate that using spillover prone areas to estimate program effects causes upward bias when the spillover is negative. We find that for many of our estimates, spillovers more than offset positive program effects, although there are instances when the net effect is small and positive.

Suggested Citation

  • Hanson, Andrew & Rohlin, Shawn, 2013. "Do spatially targeted redevelopment programs spillover?," Regional Science and Urban Economics, Elsevier, vol. 43(1), pages 86-100.
  • Handle: RePEc:eee:regeco:v:43:y:2013:i:1:p:86-100
    DOI: 10.1016/j.regsciurbeco.2012.05.002
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    References listed on IDEAS

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    Keywords

    Spillover; Tax incentives; Industry location; Redevelopment policy;

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • R51 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Finance in Urban and Rural Economies

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