The Impact of New Jersey's Urban Enterprise Zones on Local Employment: A Synthetic Control Approach

Abstract

The designation of enterprise zones is a place-based policy that seeks to revitalize economically blighted areas. The literature on place-based policies has found mixed results regarding their effects on local payroll employment. This paper examines the causal effects of five of New Jersey's Urban Enterprise Zones (UEZs) on local payroll employment: Bayonne, Gloucester City, New Brunswick, Roselle Borough, and The Wildwoods (Wildwood City, Wildwood Crest, North Wildwood, and West Wildwood). All were designated as UEZs by the state in the 2000s, and none have been previously evaluated in the academic literature. The program offers reduced local sales tax, tax credits for newly hired employees, subsidized unemployment insurance costs, worker training assistance, and tax-free purchases on capital equipment and facilities. A synthetic control approach is used with the industrial composition of local firms and poverty rate as the covariate group and no impact of UEZ status on local employment in the treatment periods of the five areas is found. These results suggest that enterprise zones may not be effective job creators for treated areas, particularly for those zones that were added long after the program's inception.