Job Growth from Opportunity Zones (Arefeva et al., 2021)

Study Profile What's in a study profile?
Causal Study Rating:
Moderate Causal Evidence
Study Type:
Causal Impact Analysis
Outcome Findings:
Employment: Mod/high-Favorable impacts
Citation
Arefeva, A., Davis, M. A., Ghent, A. C., & Park, M. (2021). Job Growth from Opportunity Zones. Brookings Institution.

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There is no conflict of interest.

Highlights

  • The study examined the impact of Opportunity Zones (OZ) on employment.
  • The study used a difference-in-differences design to compare the employment growth of Census tracts designated as Opportunity Zones and comparable tracts that were not designated. The authors used administrative data
  • nonexperimental design to assess the difference in outcomes between Census tracts designated as Opportunity Zones and comparable tracts that were not designated, using.
  • The study found a significant difference in employment growth between designated Opportunity Zones and comparable Census tracks without designation.
  • This study receives a moderate evidence rating. This means we are somewhat confident that the estimated effects are attributable to the intervention, but other factors might also have contributed.

Intervention Examined

Opportunity Zones

Features of the Intervention

The Tax Cuts and Jobs Act of 2017 created the Opportunity Zones program to promote economic growth and job creation in struggling communities through tax incentives. Investors can benefit from tax deferrals and reductions on capital gains taxes by investing in real estate or businesses located in designated low-income Census tracts. State governments played a key role in the program, with governors nominating eligible tracts by June 2018. To qualify as an Opportunity Zone, a tract must meet at least one of the following criteria: a poverty rate of 20% or higher, a median family income below 80% of the area median, or a population of fewer than 2,000 people adjacent to low-income communities.

Features of the Study

The study examined the effects of Opportunity Zones (OZ) on employment growth using a nonexperimental design. The authors used establishment-level employment data from the Your-economy Time Series (YTS) database for the years 2015 to 2019, which included detailed information on both public and private establishments across the country. Additionally, tract-level data from the 2013-2017 American Community Survey (ACS) was used, with tract eligibility based on specific economic criteria. The targeted Opportunity Zones were characterized by high poverty rates, low median family incomes, lower education levels, and a higher percentage of non-White residents compared to non-selected areas. The authors used statistical models to compare employment outcomes between designated OZ tracts and similar non-designated tracts, assessing the impact of tax incentives after two years of implementation.

Findings

Employment

  • The study found that employment growth within Census tracts significantly increased by 3.6 percentage points over a two-year period in areas designated as Opportunity Zones.

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 the estimated effects are attributable to Opportunity Zones, but other factors might also have contributed.

Reviewed by CLEAR: June 2026

Research Guidelines

Review Protocol: Living Systematic Annual Search and Review Protocol

Review Guidelines: Causal Evidence Guidelines