The Impact of New York State's Empire Zone Program on Local Income Levels

Abstract

In response to economic decline in inner-cities and rural communities, many states have employed geographically-targeted tax incentives to spark development. New York State, since 1987, has had its own version of the enterprise zone plan, appropriately titled the Empire Zone program. These zones create virtually tax-free environments for businesses to set-up shop. The original goals of creating these zones were to increase local income levels and reinvigorate distressed communities. Herein, I shall examine whether these goals were met through the analysis of tract-level Census Summary 3 data, comparing tracts with Empire Zone exposure to those without such a treatment. This analysis will be conducted through two different methods, as used by other scholars in their analysis of other statewide enterprise zone programs: a difference-of-differences method and an OLS regression model with fixed effects. These results will be supplemented by an examination as to whether impacts are different in a rural community or more urban area. I find that the Empire Zone program does not appear to have significant positive impacts on local income levels or on unemployment rates.