Urban Enterprise Zones: Employment Impacts and Fiscal Incentives

Who Benefits from State and Local Economic Development Policies?

“…Comparison of predesignation and postdesignation growth of the zone, as was done in the study by Jones and others (1985), may pro vide a better evaluation of program effects, but changes in zone growth could be due to more general economic forces, such as national booms or recessions, or changes in the overall national performance of specific industries. An even better approach is to compare changes in the growth of local areas targeted by an economic development program with changes in growth in control areas, as was done in the studies by Papke (1991), Luger and Goldstein (1990), Papke (1990), and Rubin and Wilder (1989). But choosing control areas which ideally would be iden tical in all observed and unobserved characteristics to the targeted local areas is difficult.…”

The Failures of Economic Development Incentives

“…M. Rubin and Wilder (1989) found that the cost per induced job in the Evansville, Indiana, enterprise zone was actually quite low (under $1,000 annually per job for some sectors). Though they did not do a full fiscal impact analysis, it is likely that the net revenue effects would be positive given these small incentive costs.…”

A program evaluation of the Louisville Enterprise Zone : a study of local planning and economic development.

“…Rubin and Wilder (1989) An econometric study of EZs in Indiana (Seyfried 1990) similarly found that the incentive packages of EZs had very little impact on employment. Seyfried found that the elasticity of employment with respect to the tax credits of EZs is highly inelastic, and hence have little impact on job creation.…”

“…One of her assumptions is " [I]t is assumed that employment generated in these zones is attributable to zone incentives. There is also an assumption that jobs created in such zones will be filled by the local unemployed, primarily to justify local expenditure" (Sridhar, 1996, p. 70 Rubin and Wilder (1989) found that the largest increases in employment in the Evansville, Indiana EZ were in transportation, wholesaling, retailing and services. There was a decline or stagnation in each of eight categories of manufacturing.…”

“…The approach taken was 64 similar to that used in Rubin andWilder (1989) andDowall (1996). Also, the rate of growth for the two control areas to be analyzed ( Price, 1994).…”