Project Management

Assessing The Incidence And Efficiency Of A Prominent Place Based Policy

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Executive Summary

This paper empirically assesses the incidence and efficiency of Round 1 of the federal urban Empowerment Zone (EZ) program using confidential microdata from the Decennial Census and the Longitudinal Business Database. To ground the welfare analysis, the authors develop a heterogeneous agent general equilibrium model in which the distortions generated by place-based policies depend upon a set of reduced form elasticity's which the empirical work centers on estimating. Using rejected and future applicants to the EZ program as controls they find that EZ designation substantially increased employment in zone neighborhoods, particularly for zone residents.

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