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Research
Oct 31, 2024

The Targeting of Place-Based Policies: The NewMarkets Tax Credit Versus Opportunity Zones

For a place-based policy to succeed, it must target the right areas—typically those
with lower economic development and resident well-being. The U.S. has two major
place-based tax policies: the New Markets Tax Credit (NMTC), where government-
approved entities select investments, and Opportunity Zones (OZs), where private in-
vestors choose projects. Despite underlying design differences, both target census tracts
with high poverty rates, lower median income and weaker labor markets. However, OZs
tend to attract more investment in areas with higher pre-existing private investment,
often located in prosperous counties and high-growth regions. Census tracts lacking
investment from either program generally show lower private investment, less home
value growth, and less population growth, suggesting that additional policies may be
needed to reach areas less primed for investment.


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