Who Benefits from Place-Based Policies? Job Growth from Opportunity Zones

33 Pages Posted: 4 Aug 2020

See all articles by Alina Arefeva

Alina Arefeva

UW Madison - Wisconsin School Business

Morris A. Davis

Rutgers Business School

Andra C. Ghent

University of North Carolina (UNC) at Chapel Hill - Finance Area

Minseon Park

University of Wisconsin - Madison - Univeristy of Wisconsin-Madison

Date Written: July 7, 2020

Abstract

The Tax Cuts and Jobs Act of 2017 established a new program called “Opportunity Zones” that created tax advantages for investment locating in Census tracts with relatively low income or high poverty. Importantly, only 25% of eligible tracts in each state could be designated as an Opportunity Zone. We use detailed establishment-level data and a difference-in-difference (DiD) approach to identify the designation of a tract as an Opportunity Zone on job creation. We find the Opportunity Zone designation increased employment growth relative to comparable tracts by a statistically significant 2-4 percentage points over the 2017-2019 period. This result holds for many different industries and for a variety of skill levels.

Keywords: Placed-Based Policies, Opportunity Zones, Tax Incentives

JEL Classification: H73, R30, R38, G11, G18

Suggested Citation

Arefeva, Alina and Davis, Morris A. and Ghent, Andra C. and Park, Minseon, Who Benefits from Place-Based Policies? Job Growth from Opportunity Zones (July 7, 2020). Available at SSRN: https://ssrn.com/abstract=3645507 or http://dx.doi.org/10.2139/ssrn.3645507

Alina Arefeva

UW Madison - Wisconsin School Business ( email )

975 University Avenue
Madison, WI 53706
United States

HOME PAGE: http://www.aarefeva.com

Morris A. Davis

Rutgers Business School ( email )

Rutgers Business School
One Washington Park #1092
Newark, NJ 07102
United States

Andra C. Ghent (Contact Author)

University of North Carolina (UNC) at Chapel Hill - Finance Area ( email )

Kenan-Flagler Business School
Chapel Hill, NC 27599-3490
United States

Minseon Park

University of Wisconsin - Madison - Univeristy of Wisconsin-Madison ( email )

1300 Linden Dr
Madison, WI 53706
United States

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