At a time when California is still trying to pass its budget, enterprise zone programs may be on the chopping block as lawmakers debate whether these programs are working.
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.
“If you’re going to eradicate a program, you need to evaluate it on the number of outcomes and we found these programs had a positive impact,” said Swenson, a professor at the USC Marshall School of Business and Leventhal research fellow, who is an expert on state taxation. “It’s the only program we have that gives tax breaks and in a time of economic downturn. The last thing you’d want to do is cut a program that increases jobs and decreases poverty.”
Ham, Imrohoroglu and Swenson’s just-released study points to evidence showing that enterprise zone programs foster growth by creating jobs and increasing incomes, as well as reducing poverty and unemployment rates in these areas.
Based on research Imrohoroglu and Swenson reported in 2006, the new study includes complete data on both state and federal enterprise zone programs from 1980 to 1990 and 1990 to 2000. The precise data, taken from census reports and correlated to show the differences between enterprise zones and adjacent non-enterprise zones, looked at jobs, family income, unemployment rates, percent of households with wage income and poverty rates.
The new study also controls for county and national effects, and for the effects of some overlapping federal tax zones. In both studies, the professors found that for all criteria, enterprise zone programs had a statistically significant impact.
“For California, we found that enterprise zones increased employment by 2.2 percent and increased the fraction of houses with wage and salary income by 2.1 percent,” said Swenson, adding that the programs have had a positive effect for all categories in all states that have them.
An enterprise zone is an area defined by a state that is behind in economic development and employment opportunities while meeting a number of poverty criteria.
The state gives tax breaks to qualified companies within the zone to encourage economic development. Enterprise zone programs encourage job growth, job tax credits and capital formation with lender net interest deduction and sales/use tax credits for certain machinery and equipment. These zones have been criticized in the past as states have pumped billions of dollars into the programs.
Swenson noted that a recent study that claimed California’s enterprise zones aren’t working examined only jobs and was not able to detect growth as had the USC study.
The professors’ previous study, published in 2006 and commissioned by the California Department of Housing and Community Development, found that when compared to the rest of the state, enterprise zones had a 7.35 percent drop in poverty rates; a 7.1 percent increase in household incomes; and a 3.5 percent increase in salaries. Their work was cited by Gov. Arnold Schwarzenegger shortly after it appeared.
Ham is an economics professor at USC College. Imrohoroglu is chair of the Department of Finance and Business Economics at the USC Marshall School.
Next, Swenson and his colleagues would like to look at the effects of enterprise zones on business retention in California as well as firm profitability and capital expenditures. “The wage credit of the program should affect all of these; looking at say, just employment rates, is only a part of the picture,” he said.
Evy Jacobson | Newswise Science News
Europe’s Demographic Future. Where the Regions Are Heading after a Decade of Crises
10.08.2017 | Berlin-Institut für Bevölkerung und Entwicklung
Scientists reveal source of human heartbeat in 3-D
07.08.2017 | University of Manchester
Whether you call it effervescent, fizzy, or sparkling, carbonated water is making a comeback as a beverage. Aside from quenching thirst, researchers at the University of Illinois at Urbana-Champaign have discovered a new use for these "bubbly" concoctions that will have major impact on the manufacturer of the world's thinnest, flattest, and one most useful materials -- graphene.
As graphene's popularity grows as an advanced "wonder" material, the speed and quality at which it can be manufactured will be paramount. With that in mind,...
Physicists at the University of Bonn have managed to create optical hollows and more complex patterns into which the light of a Bose-Einstein condensate flows. The creation of such highly low-loss structures for light is a prerequisite for complex light circuits, such as for quantum information processing for a new generation of computers. The researchers are now presenting their results in the journal Nature Photonics.
Light particles (photons) occur as tiny, indivisible portions. Many thousands of these light portions can be merged to form a single super-photon if they are...
For the first time, scientists have shown that circular RNA is linked to brain function. When a RNA molecule called Cdr1as was deleted from the genome of mice, the animals had problems filtering out unnecessary information – like patients suffering from neuropsychiatric disorders.
While hundreds of circular RNAs (circRNAs) are abundant in mammalian brains, one big question has remained unanswered: What are they actually good for? In the...
An experimental small satellite has successfully collected and delivered data on a key measurement for predicting changes in Earth's climate.
The Radiometer Assessment using Vertically Aligned Nanotubes (RAVAN) CubeSat was launched into low-Earth orbit on Nov. 11, 2016, in order to test new...
A study led by scientists of the Max Planck Institute for the Structure and Dynamics of Matter (MPSD) at the Center for Free-Electron Laser Science in Hamburg presents evidence of the coexistence of superconductivity and “charge-density-waves” in compounds of the poorly-studied family of bismuthates. This observation opens up new perspectives for a deeper understanding of the phenomenon of high-temperature superconductivity, a topic which is at the core of condensed matter research since more than 30 years. The paper by Nicoletti et al has been published in the PNAS.
Since the beginning of the 20th century, superconductivity had been observed in some metals at temperatures only a few degrees above the absolute zero (minus...
16.08.2017 | Event News
04.08.2017 | Event News
26.07.2017 | Event News
21.08.2017 | Materials Sciences
21.08.2017 | Health and Medicine
21.08.2017 | Materials Sciences