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Short-term versus long-term effects of the Louisville Enterprise Zone incentives: A response to Sumei Zhang

Economic Development Quarterly. June 6, 2020

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Abstract

Zhang wrote that the Louisville enterprise zone (EZ) was more successful than what previous research showed and that variations in research design have led to conflicting or mixed reviews of many local economic development policies that are based on the EZ concept. She mentions a study and an article on the Louisville, Kentucky EZ and implies the time horizon used to evaluate it was too short. This Forum/Letter to the Editor points out that the Louisville EZ went through multiple transformations and expansions over its history from 1983 to 2003, and as noted in the first of two studies, the original zone showed virtually no progress from 1983 to 1990. Several other unpublished papers pointed out the same results when the original EZ and other parts of the expanded EZ were analyzed up to the last years of the 20th century. Finally, this Forum/Letter to the Editor argues that and provides reasons for the methodology employed by Lambert and Coomes as a superior way of analyzing the Louisville EZ when compared with the methods employed by Zhang. The main reason why Zhang showed success in the EZ is because she mostly evaluates it in its final form in the late 1990s after it had annexed many sections of Jefferson County, which were not as nearly economically disadvantaged as the original Louisville EZ established in 1983.

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