Self-starter or sidekick? Independent and spillover effects of Opportunity Zones on housing supply in cities

Bibliographic Data

ID24227532
AuthorsMatthew D Wilson (0000-0002-6569-4950, Great Cities Institute, University of Illinois Chicago, USA), Kabir Jain (0009-0005-6359-6547, Great Cities Institute, University of Illinois Chicago, USA), Ahmed Rachid El‐Khattabi (0000-0001-6923-3978, UNC Environmental Finance Center, The University of North Carolina at Chapel Hill, USA), T William Lester (0000-0003-2132-8665, Urban Planning and Public Policy, University of California, Irvine, USA)
Year2026
Publication date2026-10-08
Open AccessNo
TypeARTICLE
VenueEnvironment and Planning A Economy and Space (JOURNAL)
Journal identifiersISSN: 0308-518X • E-ISSN: 1472-3409
PublisherSAGE Publications (PUBLISHER • US)
DOI10.1177/0308518x261486023
OpenAlexW7220931971
LanguageEN
References cited18

The Opportunity Zone (OZ) program, created under the 2017 Tax Cuts and Jobs Act, offers capital gains tax incentives to encourage investment in low-income communities. While proponents argue the program catalyzes new development, critics contend it may subsidize projects that would have occurred anyway, particularly in areas already experiencing market momentum. This paper evaluates the causal impact of OZ designation on housing development using quarterly United States Postal Service address data from 2015 to 2022. We employ a spatial difference-in-differences framework with matched controls to isolate the effects of OZ designation while accounting for both spatial spillovers and pre-existing growth trajectories. Our results show that OZs in principal cities experienced statistically significant increases in residential address growth following designation. However, of the OZ effect estimated in a baseline difference-in-differences specification, an estimated 41% is absorbed when we account for spatial autocorrelation in growth, indicating that a substantial share of the apparent effect reflects broader spatial spillover rather than the direct causal impact of OZ designation. We find no evidence that the presence of neighboring OZs contributes to growth and find that in some cases, spatial clustering of OZs is associated with reduced development. Finally, treatment effects are highly uneven with OZs in relatively advantaged neighborhoods seeing the largest gains, while those in the most distressed tracts experienced negligible impacts. These findings raise questions about the program’s ability to meet its equity goals and underscore the importance of accounting for spatial dynamics and local context when evaluating place-based development policies.

housing supply · low-income communities · Opportunity Zones · place-based policy · spatial autocorrelation · spatial clustering · spatial spillover effects · Tax Cuts and Jobs Act · tax incentives · urban development · Housing Market and Economics · Urban Planning and Governance · Urban, Neighborhood, and Segregation Studies

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