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Empowerment Zones, Neighborhood Change and Owner Occupied Housing

  • Krupka, Douglas J.

    (University of Michigan)

  • Noonan, Douglas S.


    (Georgia Tech)

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.

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Length: 41 pages
Date of creation: Jan 2008
Date of revision:
Handle: RePEc:iza:izadps:dp3320
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  1. Leslie E. Papke, 1993. "What Do We Know about Enterprise Zones?," NBER Working Papers 4251, National Bureau of Economic Research, Inc.
  2. Marlon G. Boarnet, 2001. "Enterprise Zones and Job Creation: Linking Evaluation and Practice," Economic Development Quarterly, , vol. 15(3), pages 242-254, August.
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  5. Douglas S. Noonan & Douglas J. Krupka & Brett M. Baden, 2007. "Neighborhood Dynamics And Price Effects Of Superfund Site Clean-Up," Journal of Regional Science, Wiley Blackwell, vol. 47(4), pages 665-692.
  6. Matias Busso & Patrick Kline, 2008. "Do Local Economic Development Programs Work? Evidence from the Federal Empowerment Zone Program," Cowles Foundation Discussion Papers 1639, Cowles Foundation for Research in Economics, Yale University.
  7. Mendelsohn, Robert & Hellerstein, Daniel & Huguenin, Michael & Unsworth, Robert & Brazee, Richard, 1992. "Measuring hazardous waste damages with panel models," Journal of Environmental Economics and Management, Elsevier, vol. 22(3), pages 259-271, May.
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  9. Lawrence Katz & Jeffrey R. Kling & B. Jeffrey Liebman & Lisa Sanbonmatsu, 2004. "Moving to Opportunity and Tranquility: Neighborhood Effects on Adult Economic Self-Sufficiency and Health From a Randomized Housing Voucher Experiment," Working Papers 860, Princeton University, Department of Economics, Industrial Relations Section..
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  11. Timothy J. Bartik, 2003. "Local Economic Development Policies," Upjohn Working Papers and Journal Articles 03-91, W.E. Upjohn Institute for Employment Research.
  12. Boarnet, Marlon G. & Bogart, William T., 1996. "Enterprise Zones and Employment: Evidence from New Jersey," Journal of Urban Economics, Elsevier, vol. 40(2), pages 198-215, September.
  13. Hanson, Andrew, 2009. "Local employment, poverty, and property value effects of geographically-targeted tax incentives: An instrumental variables approach," Regional Science and Urban Economics, Elsevier, vol. 39(6), pages 721-731, November.
  14. Landers, Jim, 2006. "Why Don't Enterprise Zones Work? Estimates of the Extent that EZ Benefits are Capitalized into Property Values," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 36(1).
  15. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
  16. Jeffrey R. Kling & Jeffrey B. Liebman & Lawrence F. Katz & Lisa Sanbonmatsu, 2004. "Moving To Opportunity And Tranquility: Neighborhood Effects On Adult Economic Self-Sufficiency And Health From A Randomized Housing Voucher Experiment," Working Papers 247, Princeton University, Woodrow Wilson School of Public and International Affairs, Center for Health and Wellbeing..
  17. Gurmu, Shiferaw & Ihlanfeldt, Keith R. & Smith, William J., 2008. "Does residential location matter to the employment of TANF recipients Evidence from a dynamic discrete choice model with unobserved effects," Journal of Urban Economics, Elsevier, vol. 63(1), pages 325-351, January.
  18. Alan H. Peters & Peter S. Fisher, 2002. "State Enterprise Zone Programs: Have They Worked?," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number sezp, April.
  19. Nelson, Jon P., 1979. "Airport noise, location rent, and the market for residential amenities," Journal of Environmental Economics and Management, Elsevier, vol. 6(4), pages 320-331, December.
  20. Bondonio, Daniele & Greenbaum, Robert T., 2007. "Do local tax incentives affect economic growth? What mean impacts miss in the analysis of enterprise zone policies," Regional Science and Urban Economics, Elsevier, vol. 37(1), pages 121-136, January.
  21. O'Byrne, Patricia Habuda & Nelson, Jon P. & Seneca, Joseph J., 1985. "Housing values, census estimates, disequilibrium, and the environmental cost of airport noise: A case study of Atlanta," Journal of Environmental Economics and Management, Elsevier, vol. 12(2), pages 169-178, June.
  22. Zabel, Jeffrey E, 1999. "Controlling for Quality in House Price Indices," The Journal of Real Estate Finance and Economics, Springer, vol. 19(3), pages 223-41, November.
  23. R A Erickson & S W Friedman, 1990. "Enterprise zones: 2. A comparative analysis of zone performance and state government policies," Environment and Planning C: Government and Policy, Pion Ltd, London, vol. 8(4), pages 363-378, August.
  24. Timothy J. Bartik, 1991. "Who Benefits from State and Local Economic Development Policies?," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number wbsle, April.
  25. Shultz, Steven D & King, David A, 2001. "The Use of Census Data for Hedonic Price Estimates of Open-Space Amenities and Land Use," The Journal of Real Estate Finance and Economics, Springer, vol. 22(2-3), pages 239-52, March-May.
  26. Robert Greenbaum & John Engberg, 2000. "An Evaluation Of State Enterprise Zone Policies," Review of Policy Research, Policy Studies Organization, vol. 17(2-3), pages 29-45, 06.
  27. Robert Greenbaum & Daniele Bondonio, 2004. "Losing Focus: A Comparative Evaluation of Spatially Targeted Economic Revitalization Programmes in the US and the EU," Regional Studies, Taylor & Francis Journals, vol. 38(3), pages 319-334.
  28. Joel A. Elvery, 2009. "The Impact of Enterprise Zones on Resident Employment," Economic Development Quarterly, , vol. 23(1), pages 44-59, February.
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