Do Opportunity Zones Spur Entrepreneurship? Evidence from County-Level Establishment Counts

Abstract

Because manufacturing and service-related industries account for a large share of employment and business activity in distressed communities, we use County Business Patterns data to examine the relationship between Opportunity Zone (OZ) designation and micro (1-9 employees), small (10-19), and medium-sized (20-49) establishments. Baseline difference-in-differences estimates suggest broad post-designation growth in establishment counts, but these effects diminish substantially after controlling for establishment persistence, state and county characteristics, and county and year fixed effects. Results from an alternative treatment-intensity measure based on the number of OZs within a county are similar. Relative-outcome specifications indicate that OZ designation is associated with higher shares of micro, small, and medium-sized manufacturing establishments of 5.9, 3.8, and 3.5 percent, respectively, and higher shares of service establishments of 1.8, 6.8, and 8.8 percent, respectively.