Journal of Economic Perspectives
ISSN 0895-3309 (Print) | ISSN 1944-7965 (Online)
Are Opportunity Zones an Effective Place-Based Policy?
Journal of Economic Perspectives
vol. 38,
no. 3, Summer 2024
(pp. 113–36)
(Complimentary)
Abstract
We evaluate the Opportunity Zones provision of the Tax Cuts and Jobs Act, focusing on its targeting and effects on investment and resident outcomes. The policy allowed substantial discretion for state governors to designate Opportunity Zones that were not necessarily the most distressed, though we find that in aggregate their ultimate selections were still somewhat well-targeted. However, we show that the policy is insufficient to encourage investment with a significantly below-market rate of return and provides the largest tax benefits to investment that would have occurred regardless of the policy. Consistent with these features of the policy's design, a substantial amount of Opportunity Zone investment has been made, including in many lower-income areas. However, it appears that much of the investment would have occurred anyway, and the evidence to date mostly points to limited effects on resident wellbeing.Citation
Corinth, Kevin, and Naomi Feldman. 2024. "Are Opportunity Zones an Effective Place-Based Policy?" Journal of Economic Perspectives, 38 (3): 113–36. DOI: 10.1257/jep.38.3.113Additional Materials
JEL Classification
- H25 Business Taxes and Subsidies including sales and value-added (VAT)
- K34 Tax Law
- R23 Urban, Rural, Regional, Real Estate, and Transportation Economics: Regional Migration; Regional Labor Markets; Population; Neighborhood Characteristics
- R32 Other Spatial Production and Pricing Analysis
- R58 Regional Development Planning and Policy
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