- Matias Busso, Jesse Gregory, and Patrick Kline
- Spring/Summer 2013
- Link to foc301d (PDF)
- Link to foc301sup (PDF)
A growing number of “place-based” policies target economic support to specific geographic areas, rather than to individuals. Economists have traditionally expressed skepticism that these programs actually benefit the residents of communities receiving support. Indeed, standard economic models of spatial equilibrium suggest mobile workers and firms will take advantage of the benefits associated with local policies by relocating across the boundaries of targeted areas. Local land prices ought then to rise and offset any welfare gains that might otherwise accrue to prior residents. We examine these predictions by evaluating the economic effects of Round I of the federal urban Empowerment Zone program, one of the largest place-based policies in the United States. Our findings build on an active literature on smaller, state-level programs.