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.

This paper examines how offering tax incentives in a local area affects the entry of new business establishments. We use the federal Empowerment Zone (EZ) program as a natural experiment to test this relationship. Using instrumental variables estimation, we find that the EZ wage tax credit is responsible for attracting about 2.2 new establishments per 1,000 existing establishments, or a total of 20 new establishments in EZ areas. New establishment growth is strongest in the retail (about 40 new establishments) and service (about five new establishments) sectors, and offset by declines or slower growth in other industries.

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Abstract:This paper examines the potential for location-based employment tax incentives to have a differential effect on establishment location and employment across industry sectors. We model the differential effect of the location-based federal Empowerment Zone (EZ) wage tax credit on equilibrium labor and total cost savings across industry sectors. The model guides our empirical work, as we test the effect of the program across industry sectors. Our empirical analysis shows that location based-tax incentives have a positive effect on firm location in some of the industries our model predicts and a negative effect in industries that could be crowded out.

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Grogger and Ridgeway (2006) use the daylight saving time shift to develop a police racial profiling test that is based on differences in driver race visibility and (hence) the race distribution of traffic stops across daylight and darkness. However, urban environments may be well lit at night, eroding the power of their test. We refine their test using streetlight location data in Syracuse, New York, and the results change in the direction of finding profiling of black drivers. Our preferred specification suggests that the odds of a black driver being stopped (relative to nonblack drivers) increase 15% in daylight compared to darkness.

This paper estimates the effect of sales taxes on employment using county-level quarterly data and a "border approach," comparing employment changes for counties in states that raised sales tax rates with their cross-border neighbors. We augment standard distance-related border measures with an economically-oriented border measure based on the share of county residents who work in a neighboring state. We fi nd that the employment effects are larger in the retail trade industry and for female workers, and that they are concentrated in counties with relatively large shares of residents working in another state.

We examine how location-based tax incentives affect quality of life and business environment through changes in property values and equilibrium wages. Using the federal Empowerment Zone program, we determine whether offering tax incentives to firms improves the welfare of the citizens and attractiveness to firms. We demonstrate that quality of life methodologies can be applied using small geographically aggregated data, such as census block groups. We find that the tax incentives offered by the program notably enhances the quality of business environment for firms in the area while modestly improving the quality of life for the individuals living in the area. * We would like to thank the Lincoln Land Institute for their generous financial support for this project. 2 The quality of business environment methodology attempts to measure the productivity of local amenities of an area. Although studying area-specific productivity has been an important and growing area of research (i.e.