Working Paper: CEPR ID: DP10131
Authors: David Neumark; Helen Simpson
Abstract: Place-based policies commonly target underperforming areas, such as deteriorating downtown business districts and disadvantaged regions. Principal examples include enterprise zones, European Union Structural Funds, and industrial cluster policies. Place-based policies are rationalized by various hypotheses in urban and labor economics, such as agglomeration economies and spatial mismatch ? hypotheses that entail market failures and often predict overlap between poor economic performance and disadvantaged residents. The evidence on enterprise zones is very mixed. We need to know more about what features of enterprise zone policies make them more effective or less effective, who gains and who loses from these policies, and how we can reconcile the existing findings. Some evidence points to positive benefits of infrastructure expenditure, and also investment in higher education and university research ? likely because of the public-goods nature of these policies. However, to better guide policy, we need to know more about what policies create self-sustaining longer-run gains.
Keywords: discretionary grants; employment; enterprise zones; higher education; industrial clusters; infrastructure; place-based policies
JEL Codes: R1; R23; R3; R5
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| enterprise zone policies (R38) | increased employment (J68) |
| enterprise zone policies (R38) | increased wages (J39) |
| enterprise zones create incentives for businesses to hire locally (R38) | improved economic outcomes for residents (R23) |
| infrastructure investment (H54) | positive effects of enterprise zones (R38) |
| education spending (H52) | positive effects of enterprise zones (R38) |
| mobility of labor and capital (F20) | dilution of intended effects of enterprise zones (R38) |
| place-based policies (R28) | mitigate long-term disadvantages for low-skilled workers (J68) |
| some studies report positive effects on employment (J68) | benefits may not accrue to intended populations (H53) |