The Targeting of Place-Based Policies: The New Markets 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 US 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 investors 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 preexisting 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.