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Targeted Business Incentives and Local Labor Markets

  • Matthew Freedman

This paper uses a regression discontinuity design to examine the effects of geographically targeted business incentives on local labor markets. Unlike elsewhere in the United States, enterprise zone (EZ) designations in Texas are determined in part by a cutoff rule based on census block group poverty rates. Exploiting this discontinuity as a source of quasi-experimental variation in investment and hiring incentives across areas, I find that EZ designation has a positive effect on resident employment, increasing opportunities mainly in lower-paying industries. While business sitings spurred by the program are more geographically diffuse, EZ designation is associated with increases in home values.

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File URL: http://jhr.uwpress.org/cgi/reprint/48/2/311
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Article provided by University of Wisconsin Press in its journal Journal of Human Resources.

Volume (Year): 48 (2013)
Issue (Month): 2 ()
Pages: 311-344

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Handle: RePEc:uwp:jhriss:v:48:y:2013:ii:1:p:311-344
Contact details of provider: Web page: http://jhr.uwpress.org/

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  1. Kenneth Y. Chay & Michael Greenstone, 1998. "Does Air Quality Matter? Evidence from the Housing Market," NBER Working Papers 6826, National Bureau of Economic Research, Inc.
  2. Criscuolo, Chiara & Martin, Ralf & Overman, Henry G & Van Reenen, John, 2012. "The causal effects of an industrial policy," CEPR Discussion Papers 8818, C.E.P.R. Discussion Papers.
  3. Gobillon, Laurent & Magnac, Thierry & Selod, Harris, 2010. "Do unemployed workers benefit from enterprise zones? The French experience," TSE Working Papers 10-201, Toulouse School of Economics (TSE).
  4. Neumark, David & Kolko, Jed, 2010. "Do enterprise zones create jobs? Evidence from California's enterprise zone program," Journal of Urban Economics, Elsevier, vol. 68(1), pages 1-19, July.
  5. Freedman, Matthew & Owens, Emily G., 2011. "Low-income housing development and crime," Journal of Urban Economics, Elsevier, vol. 70(2), pages 115-131.
  6. Ham, John C. & Swenson, Charles & İmrohoroğlu, Ayşe & Song, Heonjae, 2011. "Government programs can improve local labor markets: Evidence from State Enterprise Zones, Federal Empowerment Zones and Federal Enterprise Community," Journal of Public Economics, Elsevier, vol. 95(7), pages 779-797.
  7. Freedman, Matthew, 2012. "Teaching new markets old tricks: The effects of subsidized investment on low-income neighborhoods," Journal of Public Economics, Elsevier, vol. 96(11), pages 1000-1014.
  8. David S. Lee & Thomas Lemieux, 2009. "Regression Discontinuity Designs in Economics," NBER Working Papers 14723, National Bureau of Economic Research, Inc.
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