Working Paper: NBER ID: w14373
Authors: Edward L. Glaeser; Joshua D. Gottlieb
Abstract: Should the national government undertake policies aimed at strengthening the economies of particular localities or regions? Agglomeration economies and human capital spillovers suggest that such policies could enhance welfare. However, the mere existence of agglomeration externalities does not indicate which places should be subsidized. Without a better understanding of nonlinearities in these externalities, any government spatial policy is as likely to reduce as to increase welfare. Transportation spending has historically done much to make or break particular places, but current transportation spending subsidizes low-income, low-density places where agglomeration effects are likely to be weakest. Most large-scale place-oriented policies have had little discernable impact. Some targeted policies such as Empowerment Zones seem to have an effect but are expensive relative to their achievements. The greatest promise for a national place-based policy lies in impeding the tendency of highly productive areas to restrict their own growth through restrictions on land use.
Keywords: agglomeration economies; human capital spillovers; urban policy
JEL Codes: D0; H0; R0
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| interventions favoring certain geographic areas (R23) | welfare benefits (I38) |
| transportation policies (R48) | urban growth (R11) |
| population density (J11) | productivity (O49) |
| agglomeration economies (R11) | urban output (R29) |
| human capital spillovers (J24) | productivity (O49) |
| population density (J11) | urban productivity (R11) |