Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:

 

New Study Shows Enterprise Zones Work

20.02.2009
In the midst of the state’s financial woes, three USC professors outline the positive aspects of programs aimed at economic development and employment.

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
Further information:
http://www.usc.edu

More articles from Studies and Analyses:

nachricht Amputees can learn to control a robotic arm with their minds
28.11.2017 | University of Chicago Medical Center

nachricht The importance of biodiversity in forests could increase due to climate change
17.11.2017 | Deutsches Zentrum für integrative Biodiversitätsforschung (iDiv) Halle-Jena-Leipzig

All articles from Studies and Analyses >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: Long-lived storage of a photonic qubit for worldwide teleportation

MPQ scientists achieve long storage times for photonic quantum bits which break the lower bound for direct teleportation in a global quantum network.

Concerning the development of quantum memories for the realization of global quantum networks, scientists of the Quantum Dynamics Division led by Professor...

Im Focus: Electromagnetic water cloak eliminates drag and wake

Detailed calculations show water cloaks are feasible with today's technology

Researchers have developed a water cloaking concept based on electromagnetic forces that could eliminate an object's wake, greatly reducing its drag while...

Im Focus: Scientists channel graphene to understand filtration and ion transport into cells

Tiny pores at a cell's entryway act as miniature bouncers, letting in some electrically charged atoms--ions--but blocking others. Operating as exquisitely sensitive filters, these "ion channels" play a critical role in biological functions such as muscle contraction and the firing of brain cells.

To rapidly transport the right ions through the cell membrane, the tiny channels rely on a complex interplay between the ions and surrounding molecules,...

Im Focus: Towards data storage at the single molecule level

The miniaturization of the current technology of storage media is hindered by fundamental limits of quantum mechanics. A new approach consists in using so-called spin-crossover molecules as the smallest possible storage unit. Similar to normal hard drives, these special molecules can save information via their magnetic state. A research team from Kiel University has now managed to successfully place a new class of spin-crossover molecules onto a surface and to improve the molecule’s storage capacity. The storage density of conventional hard drives could therefore theoretically be increased by more than one hundred fold. The study has been published in the scientific journal Nano Letters.

Over the past few years, the building blocks of storage media have gotten ever smaller. But further miniaturization of the current technology is hindered by...

Im Focus: Successful Mechanical Testing of Nanowires

With innovative experiments, researchers at the Helmholtz-Zentrums Geesthacht and the Technical University Hamburg unravel why tiny metallic structures are extremely strong

Light-weight and simultaneously strong – porous metallic nanomaterials promise interesting applications as, for instance, for future aeroplanes with enhanced...

All Focus news of the innovation-report >>>

Anzeige

Anzeige

Event News

See, understand and experience the work of the future

11.12.2017 | Event News

Innovative strategies to tackle parasitic worms

08.12.2017 | Event News

AKL’18: The opportunities and challenges of digitalization in the laser industry

07.12.2017 | Event News

 
Latest News

A whole-body approach to understanding chemosensory cells

13.12.2017 | Health and Medicine

Water without windows: Capturing water vapor inside an electron microscope

13.12.2017 | Physics and Astronomy

Cellular Self-Digestion Process Triggers Autoimmune Disease

13.12.2017 | Life Sciences

VideoLinks
B2B-VideoLinks
More VideoLinks >>>