A First Look at the Impact of Opportunity Zones on Commercial Investment and Economic Activity

Posted: 24 Mar 2021

See all articles by Kevin Corinth

Kevin Corinth

University of Chicago - Harris School of Public Policy

Naomi E. Feldman

Hebrew University of Jerusalem, Department of Economics

Date Written: February 28, 2021

Abstract

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

Corinth, Kevin and Feldman, Naomi E., A First Look at the Impact of Opportunity Zones on Commercial Investment and Economic Activity (February 28, 2021). Available at SSRN: https://ssrn.com/abstract=3794396

Kevin Corinth

University of Chicago - Harris School of Public Policy ( email )

1155 East 60th Street
Chicago, IL 60637
United States

Naomi E. Feldman (Contact Author)

Hebrew University of Jerusalem, Department of Economics ( email )

Mount Scopus
Jerusalem, Jerusalem 91905
Israel
9190501 (Fax)

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