Enterprise Zones and Local Employment: Evidence From the States' Programs

Many states respond to deteriorating economic conditions in their inner cities and rural communities by establishing geographically targeted tax incentives. In this paper, we examine the impact of several of these Enterprise Zone (EZ) programs on local employment. The results show that the EZ programs do not have a significant impact on local employment. Program impact does not depend on the monetary amount of the incentives and or on specific features of program design. These conclusions are constant across two econometric approaches to controlling for the non-random placement of zones and stand up to a wide variety of sensitivity analyses.