Do enterprise zones really work to lift inner cities?

“Enterprise zones” have an intuitive appeal. Flood a poor area with all sorts of aid to attract business. Create thriving little Hong Kongs in places of despair, particularly urban areas, through the miracle of free enterprise.  Some folks, especially on the right, have suggested turning Detroit in a giant, low-tax enterprise zone. And President Obama has proposed his own version, “promise zones.” More from the San Francisco Fed:

Federal Empowerment Zones consist of relatively poor, high-unemployment Census tracts. They offer businesses tax credits of up to $3,000 per worker for hiring zone residents and (in the original zones) block grants of up to $100 million to be used for business assistance, infrastructure investment, and training programs. Benefits vary across state programs, but many also emphasize hiring credits.

But do these enterprise zones actually work?  I have been trying to assemble an urban policy agenda. But I don’t find these results especially compelling. Again, the SF Fed:

First, even though some research on federal Empowerment Zones finds some evidence of positive employment effects, other research fails to find evidence of reduced poverty, and points to some increases in the share of households falling below other low income thresholds. Second, there is consistent evidence of housing price increases, implying that benefits are received by unintended recipients. Other results not included in the table sometimes point to negative spillover effects on nearby areas, suggesting that enterprise zones largely rearrange the location of jobs rather than creating more of them.

Our overall view of the evidence is that state enterprise zone programs have generally not been effective at creating jobs. The jury is still out on federal programs—Empowerment Zones in particular—and we need more research to understand what features of enterprise zones help spur job creation. Moreover, even if there is job creation, it is hard to make the case that enterprise zones have furthered distributional goals of reducing poverty in the zones, and it is likely that they have generated benefits for real estate owners, who are not the intended beneficiaries.