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The Targeting of Place-Based Policies: The New Markets Tax Credit Versus Opportunity Zones

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Listed:
  • Kevin Corinth
  • David Coyne
  • Naomi E. Feldman
  • Craig Johnson

Abstract

For a place-based policy to succeed, it must target the right areas—typically those with lower economic development and resident well-being. The U.S. has two major place-based tax policies: the New Markets Tax Credit (NMTC), where government approved entities select investments, and Opportunity Zones (OZs), where private investors choose projects. Despite underlying design differences, both target census tracts with relatively high poverty rates, low median income and weak labor markets. However, OZs tend to attract more investment in areas with higher pre-existing private investment, often located in prosperous counties and high-growth regions. Census tracts lacking investment from either program generally have less private investment, lower home value growth, and lower population growth, suggesting that additional policies may be needed to reach areas less primed for investment.

Suggested Citation

  • Kevin Corinth & David Coyne & Naomi E. Feldman & Craig Johnson, 2025. "The Targeting of Place-Based Policies: The New Markets Tax Credit Versus Opportunity Zones," NBER Working Papers 33414, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:33414
    Note: PE
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    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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