An Evaluation of California's Enterprise Zone Programs

Abstract

In 1984, California joined the growing list of states adopting enterprise zone legislation in an attempt to stimulate targeted business development and employment growth within economically distressed areas. This article reports on a first-ever assessment of whether California's two enterprise zone programs have stimulated employment. The existing Enterprise Zone and Economic Incentive Area programs (referred to in the article collectively as enterprise zone programs) have produced very modest economic benefits, and there is little evidence to suggest that they have strengthened the economic advantages of California's zones. Shift-share analysis indicates that employment growth was lower than predicted in 11 of 13 areas. A survey of businesses indicates that in only 23 cases did zone program incentives influence plant location or expansion decisions. In and of themselves, zone incentives and resources have apparently done little to boost job creation and business investment.

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