Do Enterprise Zones Create Jobs? Evidence from California's Enterprise Zone Program

In a recent NBER paper (Dec 08), David Neumark and Jed Kolko use new establishment-level data and geographic mapping methods to improve upon evaluations of the effectiveness of state enterprise zones, focusing on California's program. Because zone boundaries do not follow census tracts or zip codes, they created digitized maps of original zone boundaries and later expansions. They combine these maps with geocoded observations on most businesses located in California. The evidence indicates that enterprise zones do not increase employment. They also find no shift of employment toward the lower-wage workers or manufacturing sector targeted by enterprise zone incentives. They conclude that the program is ineffective in achieving its primary goals.