Poster #102 - Where Do Opportunity Zone Jobs Go? A Social Network Analysis of Employment Flows in Place-Based Tax Policy

• In Event: Saturday Poster Luncheon

Abstract

The federal Opportunity Zone (OZ) program directed an estimated $75 billion in private capital to roughly 8,700 designated low-income census tracts, yet rigorous evaluations consistently find no improvement in resident welfare. This paper provides the first structural explanation for why capital inflows do not translate into resident gains and identifies the conditions under which they can.Using LODES origin-destination employment data and American Community Survey estimates through 2023, we build on Freedman, Kouchekinia, and Neumark (2025) and show that OZ designation produces near-zero effects on workplace employment through our full sample (β = 0.005, p = 0.49). Extending the panel to 2023 three years beyond prior work we document a modest but statistically significant increase in resident employment (+1.0%, p < 0.001), suggesting that resident gains materialize slowly as network connections consolidate, consistent with the 10-year capital gains deferral horizon.We then construct a directed employment network from the full LODES origin-destination records which register, for every census-tract pair, the number of workers employed at the workplace tract who reside in the home tract to identify the structural mechanism governing who captures these gains. A striking 25.3% of OZ tracts carried no employment connections whatsoever before designation, compared with just 13.3% of comparable low-income community controls. OZ tracts systematically occupy peripheral, isolated positions in the commuting network characterized by low employer catchment (in-degree centrality), limited resident reach (out-degree), high structural constraint, and near-zero connectivity to high-income labor markets.Using the quasi-experimental variation in OZ designation, we show that designation raises employer catchment breadth in Rural markets by approximately 6.2% one year after designation (p = 0.029, CZ-clustered), confirming that new investment does generate employment connections. However, pre-OZ network position strongly determines who benefits: each standard deviation of pre-designation in-degree centrality is associated with a 4.5 percentage-point larger resident employment gain in Rural markets (p < 0.001) seven times the corresponding Urban estimate. Tracts that were already isolated before designation gain new employers but not new resident employment, because the new connections are captured by in-commuters already integrated into the broader labor market.These findings reframe the OZ policy debate. Capital subsidies alone cannot improve resident welfare when target tracts are structurally disconnected from the labor-market network. Effective complementary interventions resident workforce training, transit investment, and local hiring requirements are necessary to convert network position gains into resident employment gains, and should be targeted toward OZ tracts with the lowest pre-existing in-degree centrality.

Author

• Hitanshu Pandit, Bates College
  Presenting Author