There is no conflict of interest.
Highlights
- The study examined the impact of the New Markets Tax Credit (NMTC) program on employment and earnings.
- The study used a nonexperimental design to estimate the effects of the NMTC program on community outcomes, based on census tracts. The authors used administrative data and statistical models to examine the impact of the NMTC-funded projects on employment and income in the surrounding community.
- The study found that NMTC-funded projects were significantly associated with increased numbers of residents with jobs and increased median income levels for residents.
- This study receives a moderate evidence rating. This means we are somewhat confident that the estimated effects are attributable to the New Markets Tax Credit (NMTC) program, but other factors might also have contributed.
Intervention Examined
Features of the Intervention
The New Markets Tax Credit (NMTC) program, established in 2000 under the Community Renewal Tax Relief Act, aimed to stimulate economic growth and job creation in economically distressed communities by offering tax credits. Eligibility for the program was based on specific criteria such as poverty rates, median income, and unemployment rates. The program was administered across the United States by the U.S. Department of the Treasury through Community Development Entities (CDEs), which include financial institutions and development corporations. The NMTC provided a 39% tax credit on investments in eligible projects over seven years, focused on a variety of development areas such as commercial real estate, manufacturing, and healthcare facilities, with a focus on boosting the economy and creating jobs in underserved regions.
Features of the Study
The study used a nonexperimental design to evaluate the NMTC program’s impact on economically distressed communities. The authors compared changes in outcomes before and after NMTC investments in 3,875 treated and 32,212 comparison census tracts from 2000 to 2017. The authors analyzed data from the NMTC program, InfoUSA, Longitudinal Employer-Household Dynamics (LEHD), and the American Community Survey (ACS) using statistical models.
Findings
- Employment. The study found that census tracts with NMTC projects had a significant increase of about 27 new jobs for residents.
- Earnings and wages. The study found that census tracts with NMTC projects intended to attract jobs with higher-than-average salaries had a significant average increase of residents' median income of $562 per year.
Considerations for Interpreting the Findings
The number of firms in neighborhoods started to increase before the NMTC project began, indicating that some of the observed effects may not be solely attributed to the NMTC investment. Also, these analyses cannot determine whether the benefits from NMTC projects have gone to current residents or to new residents attracted by the NMTC project.
Causal Evidence Rating
Research Guidelines
Review Protocol: Living Systematic Annual Search and Review Protocol
Review Guidelines: Causal Evidence Guidelines