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The Impact of Opportunity Zones on Commercial Investment and Economic Activity

Author

Listed:
  • Corinth, Kevin

    (American Enterprise Institute for Public Policy Research)

  • Feldman, Naomi E.

    (Hebrew University, Jerusalem)

Abstract

A provision of the Tax Cuts and Jobs Act of 2017 offered tax incentives for investing in certain low-income areas in the United States called Opportunity Zones (OZs). The goal of this provision was to spur private investment in OZs in order to improve the economic well-being of their residents. This paper uses a regression discontinuity design to evaluate the impact of OZs on commercial investment and economic activity. Using data on the universe of all significant commercial investments in the United States, we find that OZ selection led to practically no increase in investment in OZs. These findings are supported by additional data from Mastercard that also show no evidence of increased business activity nor consumer spending. Overall, our findings suggest that the impact of OZs on economic improvement has thus far been limited.

Suggested Citation

  • Corinth, Kevin & Feldman, Naomi E., 2022. "The Impact of Opportunity Zones on Commercial Investment and Economic Activity," IZA Discussion Papers 15247, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp15247
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    References listed on IDEAS

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    Cited by:

    1. Alan Sage & Mike Langen & Alex van de Minne, 2023. "Where is the opportunity in opportunity zones?," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 51(2), pages 338-371, March.

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    More about this item

    Keywords

    opportunity zones; investment; tax policy; poverty;
    All these keywords.

    JEL classification:

    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis

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