On March 10, UCI economist David Neumark will testify at a California State Senate informational hearing on the effectiveness of the state’s Enterprise Zone (EZ) Program.  Created in 1984 with the goal of "stimulating business investment in depressed areas of the State and creating job opportunities," the EZ Program is one of many to come under recent scrutiny due to the state's budget crisis.

According to Neumark’s research, the program has no measurable effect on new job creation for businesses located within zone boundaries.  Findings are based on comparisons of businesses inside enterprise zones to comparable businesses located either just outside designated enterprise zones, or within areas that subsequently were incorporated into the zones. 

"Creating jobs is the top priority of the Enterprise Zone Program," says Neumark. "Based on its inability to meet its key objective, the Enterprise Zone Program is ineffective." 

The results of this research - co-authored with Jed Kolko of the Public Policy Institute of California – are published in the January 2010 issue of the Journal of Urban Economics and the winter 2010 issue of the Journal of Policy Analysis and Management.

Using street-by-street GIS mapping in conjunction with business employment and location data from the National Establishment Time-Series, Neumark and Kolko found that from 1992-2004, state designated enterprise zones had no effect on job creation. Their research also indicated that the program had virtually no effect on growth in number of business establishments within zones. 
 
"We're facing a time when there is obvious concern over low and declining employment while, at the same time, the state of California is dealing with a huge budget crisis," says Neumark. "If this fairly expensive program doesn't appear to be achieving its main objective, it's important that its continuation be reevaluated."

Read more at http://www.socsci.uci.edu/newsevents/news_item.php?nid=2050.

The hearing is being convened by the State Senate’s Standing Committee on Revenue and Taxation.  It will be held in State Capitol Room 3191 at 1:30 p.m. March 10.  Currently, there are no plans for it to be streamed online or televised.