Graduation Year

2017

Document Type

Campus Only Senior Thesis

Degree Name

Bachelor of Arts

Department

Mathematical Economics

Reader 1

Nayana Bose

Reader 2

Kerry Odell

Terms of Use & License Information

Creative Commons Attribution 4.0 License
This work is licensed under a Creative Commons Attribution 4.0 License.

Rights Information

© 2017 Mia L Shackelford

Abstract

Policymakers who wish to combat poverty or inequality are faced with a choice between policies that target particular individuals in need and those that select geographies with high need. When policymakers choose the latter, “place-based” economic development policies, the beneficiaries of the policy may not be those who policymakers intended, particularly if migration to the targeted area is possible. I study these issues in the context of the California Enterprise Zone program, which distributed hiring subsidies and tax credits to businesses operating in specific areas within the state judged to be economically depressed. Working with a model in which individuals will migrate to enterprise zone areas if they have higher wages and employment and lower cost of living, I hypothesize that enterprise zone designation will raise housing costs as well as income, although the latter may be mitigated by expanding labor supply. I use individual and household level data from the American Community Survey from 2005 to 2014 and a difference in difference regression approach to empirically analyze the program. I find a statistically and economically significant relationship between enterprise zone designation and both rental costs and income from work, and mixed effects on the proportion of rent to household income. I find that effects on income from work, household income, and rental costs vary by race and demographic group. My results have significant implications for the design of local economic development policy as well as the analysis of any public policy under open borders and racially stratified labor networks.

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