Neighborhood-Level Investment from the U.S. Opportunity Zone Program: Early Evidence

41 Pages Posted: 28 Mar 2022

See all articles by Patrick Kennedy

Patrick Kennedy

University of California, Berkeley - Department of Economics; National Bureau of Economic Research (NBER); Government of the United States of America - Joint Committee on Taxation

Harrison Wheeler

University of California, Berkeley - Department of Economics

Date Written: April 15, 2021

Abstract

We use electronically-filed federal tax records from tax year 2019 to document the first available evidence on the short-run response of financial capital to the Opportunity Zone (OZ) program, a federal place-based policy that provides tax incentives for capital investments in more than 8,000 low-income neighborhoods across the United States. We observe $18.9 billion of aggregate OZ investments from electronic filers in tax year 2019. While these data do not yet incorporate paper filers, several suggestive patterns emerge. First, OZ capital appears highly spatially concentrated. Second, investors report equity and property investments in neighborhoods with relatively higher incomes, home values, educational attainment, and pre-existing income and population growth. Finally, we geocode the universe of individual and business tax records to construct novel tract-level measures of wages, employment, commuting, firm growth, and real investment that we plan to use to evaluate the causal effect of the OZ tax subsidies as more comprehensive data become available. We demonstrate that these estimates closely match corresponding measures from publicly available Census data. We explicitly discuss limitations of the data, and will update this working paper as more comprehensive data become available.

Suggested Citation

Kennedy, Patrick and Wheeler, Harrison, Neighborhood-Level Investment from the U.S. Opportunity Zone Program: Early Evidence (April 15, 2021). Available at SSRN: https://ssrn.com/abstract=4024514 or http://dx.doi.org/10.2139/ssrn.4024514

Patrick Kennedy (Contact Author)

University of California, Berkeley - Department of Economics ( email )

579 Evans Hall
Berkeley, CA 94709
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Government of the United States of America - Joint Committee on Taxation ( email )

Harrison Wheeler

University of California, Berkeley - Department of Economics ( email )

579 Evans Hall
Berkeley, CA 94709
United States

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