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Great article by @EricLiptonNYT & @JesseDrucker on Opportunity Zones. As I've argued before, these subsidies for capital investment in state-selected "low-income" census tracts is likely to not be very cost-effective in helping solve urban problems.
As article outlines, & given way tracts selected via state-directed political process, in many cases selected tracts were already gentrifying, & therefore OZs (1) often subsidize what would have happened anyway, (2) sometimes subsidize stuff that doesn't help nbhd residents
Lessons from past nbhd subsidy programs -- enterprise zones, Empowerment Zones -- suggest that in distressed nbhds, cash subsidies alone are ineffective way to solve nbhd problems: hamiltonproject.org/assets/legacy/…
Most evaluations of state enterprise zone programs have been negative. If nbhd has problems, simply providing cash subsidies rarely is enough to lead to desired nbhd improvements. Empowerment Zones, which combined subsidies for nbhd hiring w/ block grant to improve...
targeted nbhd public services, including assistance for business development, seems to have been more effective, based on Busso/Gregory/Kline: aeaweb.org/articles?id=10…
Which fits common sense: if an area has problems, solution needs to target problems rather than just throwing money at problems. Throwing money may help, but much more if the problems are targeted w/ appropriate services.
Another note: Opportunity Zones subsidize capital in distressed nbhds. Is that the main problem, or do we need to increase jobs & wages of people in these neighborhoods? Obviously there are many problems, but why K subsidy if problems may be more non-employment or low wages?
& further note: OZ program could have set up to allow for rigorous evaluation. Could have required states to set up quantitative scoring system for selecting assisted tracts. This would have allowed for "regression discontinuity" evaluation that compared tracts around cutoff.
As it is, the OZ program will generate a slew of dueling evaluations that are unlikely to ever fully settle the issue of how much new capital investment was generated vs. how much simply subsidized investment that would have occurred anyway.
