1. 1 California Enterprise Zone Program: A Review and Analysis Presentation By: Chuck Swenson Professor and Leventhal Research Fellow, Marshall School of Business, USC

2. 2 Outline EZs: The National Landscape Swenson (2009) and Ham, Imrohoroglu, and Swenson(2009) Kolko and Neumark (2009) vs. Ham et al Conclusions

3. 3 EZs: The National Landscape Connecticut had first program in 1983 In 2003, 38 states had EZs Currently, 43 states have EZs (or EZ type programs) By-state benefits vary widely: from modest hiring credits (AZ, Utah) to comprehensive income, property, and sales/use tax benefits (NY, PA, MN). See my Treatise chapter handout.

4. 4 National Landscape (cont’d)

5. 5 Swenson (2009) Hiring credits should: –Increase employment (decrease unemployment rates) –Increase wages –Increase capital expenditures –Increase firm after-tax income –Increase business retention

6. 6 Ham, Imrohoroglu, and Swenson (2009) About the authors National study (all 43 states with EZs) over 20 years Geo-coding of 8000+ EZ census tracts and cohort tracts Differences in differences design National as well as state specific effects

7. 7 Ham et al (cont’d)

8. 8 National Results: EZs have statistically significant –Decrease in unemployment rate (1.6%; Table 2) –Decrease in poverty rate (5.4%; Table 3) –Increase in fraction of households with wage and salary income (.61%; Table 4)

9. 9 Ham et al (cont’d) CA Results: EZs result in statistically significant: –Decrease in unemployment rate (2.2%; Table 2) –Decrease in poverty rate (.5%--Table 3;not significant) –Increase in fraction of households with wage and salary income (2.0%; Table 4)

10. 10 Kolko and Neumark (2009) vs. Ham et al (2009) Scope: –Ham et al (national plus specific states; control for national effects) –Kolko and Neumark (CA only; no control for national effects)

11. 11 Kolko vs. Ham (cont’d) Outcome variables: –Ham et al: unemployment rates, poverty rates, wage and salary incomes –Kolko & Neumark: employment levels only

12. 12 Kolko vs. Ham (cont’d) Source data: –Ham et al: Bureau of Census (available since 1970s) –Kolko & Neumark: relatively new dataset derived from Standard & Poors surveys sent to businesses->noise in data->high standard errors->lowered power of statistical tests?

13. 13 Conclusions EZs seem to work More analysis on business retention, expansion, increased number of firms, capital outlays, etc. would solidify findings