How Do LIHTC and Other Federal Place-Based Policies Shape Neighborhood Establishments?

In this paper, we examine the role of the Low-Income Housing Tax Credit (LIHTC) and other federal place-based policies in shaping neighborhood establishments since 1990. Specifically, we ask how these federal investments are associated with establishment densities and examine variation over time as well as across neighborhood poverty status in metropolitan areas. We combine tract-level data on establishments from the National Neighborhood Data Archive (NaNDA) with administrative data on LIHTC and 16 other federal place-based policies. Our results reveal increases in the density of neighborhood establishments that predate the first LIHTC development in a neighborhood and continue afterward, suggesting a policy-relevant selection process as well as a trend of community development that we argue is supported, rather than undermined, by LIHTC. These results hold across high- and low-poverty neighborhoods. This study adds to our understanding of the mechanisms behind public policy-induced neighborhood change and inequality in amenities across low- and high-income communities.