A First Look at the Impact of Opportunity Zones on Commercial Investment and Economic Activity
Posted: 24 Mar 2021
Date Written: February 28, 2021
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 outcomes of their residents. This paper evaluates the impact of OZs during their first two years of implementation, using both difference in differences and a regression discontinuity design that address the fact that OZs may have differed from non-selected areas on unobserved characteristics. Using data on the universe of all significant commercial investments in the United States, we find that OZ designation led to little or no increase in the total amount of investment or the number of investments in OZs. Using smartphone tracking data, we find only slight increases in the market share of higher quality branded restaurants. Overall, our findings suggest that the impact of OZs in their first two years have been limited.
Keywords: Opportunity zones, investment, tax policy, poverty
JEL Classification: H53, E22, D61
Suggested Citation: Suggested Citation