The Center of the California Enterprise Zone Information Universe


USC Study: “Government Programs Can Improve Local Labor Markets: Evidence from State Enterprise Zones, Federal Empowerment Zones and Federal Enterprise Communities”

I previously linked to a press release on the University of Southern California’s website describing a new study on Enterprise Zone programs that found a positive effect, “A new study by USC professors John Ham, Ayse Imrohoroglu and Charles Swenson reveals that these programs are indeed bright spots in areas lagging in economic development and employment in California and the rest of the nation.”  Dr. Swenson recently contacted me to let me know that the full study is now available online: http://www.marshall.usc.edu/assets/124/21553.pdf.

This new study differs with the other recently published study by David Neumark and Jed Kolko (see here) which criticized California’s program for failing to produce measurable increases in employment.

I asked Professor Swenson how, given that these two studies arrive at opposite conclusions, did the studies differ in methodology?  Dr. Swenson responded with the following points:

  • We consider (and control for) national trends (Neumark and Kolko do not).
  • I think we use more powerful econometric (statistical) methods.
  • N&K examine just CA; we look at all states’ EZ programs. Despite huge differences in how states structure their programs, they all seem to work. When you see systematic evidence across a variety of settings, there is a more compelling argument that these programs are effective. In contrast, when you examine only one state, it’s difficult to generalize the findings more broadly.
  • N&K examine only employment; we examine employment, unemployment rates, poverty rates, and fraction of households with wage and salary income.

He also supplied me with a copy of an additional paper focused more specifically on the California program, “On the Effectiveness of the California Enterprise Zone Program.”  This paper makes the argument that, “just looking at employment is an incomplete measure of the efficacy of the CA EZ program. The broader measures include wage increase for EZ employees; increased capital investment; increased profitability, business retention, etc.”

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