The Impacts of Opportunity Zones on Zone Residents (No. w28573) (Freedman et al., 2021)

Study Profile What's in a study profile?
Causal Evidence Rating:
Moderate Causal Evidence
Study Type:
Causal Impact Analysis
Outcome Findings:
Earnings and wages: Mod/high-No impacts
Employment: Mod/high-No impacts
Citation
Freedman, M., Khanna, S., & Neumark, D. (2021). The Impacts of Opportunity Zones on Zone Residents. (No. w28573). National Bureau of Economic Research.

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There is no conflict of interest.

Highlights

  • The study's objective was to examine the impact of Opportunity Zones (OZ) on employment and earnings.
  • The study used a nonexperimental matched comparison group design. Using data from the Community Development Financial Institutions (CDFI) Fund and the American Community Survey, the authors conducted statistical models to compare the differences in outcomes between the residents in treatment (eligible and designated) and comparison (eligible but not designated) census tracts.
  • The study found no significant differences in employment or earnings between treatment and comparison census tracts.
  • This study receives a moderate evidence rating. This means we are somewhat confident that any estimated effects would be attributable to Opportunity Zones, but other factors might also have contributed. However, the study did not find statistically significant effects.

Intervention Examined

Opportunity Zones

Features of the Intervention

The Opportunity Zone (OZ) program was signed into law in 2017 as part of the Tax Cut and Jobs Act. The goal of OZs is to boost investments in low-income communities, improving the economic conditions for residents and positively affecting businesses, real estate values, and other economic indicators. The program's main advantage is that it allows for untaxed or deferred taxes on capital gains when funds are invested or reinvested in designated OZs. Up to 25% of a state's census tracts can be designed as an OZ if the tract meets median family income or poverty rate criteria. Also, tracts in previously established Empowerment Zones, those with populations under 2,000, and tracts adjacent to low-income areas are eligible.

Features of the Study

The study used a nonexperimental design with a matched comparison group to examine the impact of OZs on employment and earnings. The study authors used data from the Community Development Financial Institutions (CDFI) Fund at the U.S. Department of Treasury to identify treatment (eligible and designated) and comparison (eligible but not designated) census tracts. Next, they used data from the U.S. Census Bureau’s American Community Survey (ACS) from 2013 to 2017 to match treatment census tracts (OZs) to comparison census tracts based on employment and earnings from the five years before the OZ designation. The sample used for analyses included 15,200 census tracts (half treatment and half comparison) and 106,400 individuals in the U.S (omitting Puerto Rico and U.S. territories). The census tracts designated as OZs received or could have received investments with associated tax breaks and comparison tracts could not. The average annual earnings of residents ranged from $28,000 to $36,000 and between 50% and 55% of adults were employed. The authors used statistical models to compare the employment and earnings outcomes of residents in treatment and comparison census tracts in 2018 and 2019.

Findings

Employment

  • The study found that the number of employed individuals did not differ significantly between residents in treatment and comparison census tracts.

Earnings and wages

  • The study found that the average annual earnings of employed individuals did not differ significantly between residents in in treatment and comparison census tracts.

Causal Evidence Rating

The quality of causal evidence presented in this report is moderate because it was based on a well-implemented nonexperimental design. This means we are somewhat confident that any estimated effects would be attributable to Opportunity Zones, but other factors might also have contributed. However, the study did not find statistically significant effects.

Additional Sources

Freedman, M., Khanna, S., & Neumark, D. (2021). The Impacts of Opportunity Zones on Zone Residents Center of Economic Studies (CES) Working Paper Series, CES-21-12. U.S. Census Bureau.
Reviewed by CLEAR: June 2026

Research Guidelines

Review Protocol: Living Systematic Annual Search and Review Protocol

Review Guidelines: Causal Evidence Guidelines