Do Place-Based Policies Matter?

David Neumark and Helen Simpson reflect on place based policies. These policies favor a region/location for development.

Place-based policies refer to government efforts to enhance the economic performance of specific areas within their jurisdiction. Most commonly, place-based policies target underperforming areas, such as deteriorating downtown business districts in the United States or disadvantaged areas in European Union countries. But they can also be designed to improve the economic performance of areas that are already doing well, for example by encouraging further development of an existing cluster of businesses concentrated in a particular industry.

Do these place-based policies work? This question is difficult to answer because finding similar areas that were not targeted for assistance to use for an appropriate comparison is a challenge. Moreover, the local emphasis of these policies implies that we have to account for the possibility that workers and businesses may move in response to policy incentives. This mobility can lead to benefits going to those who were not originally targeted. A further concern is that, even if a place-based policy benefits one area, it can reduce economic activity in another area, which raises the question of whether these policies increase overall economic activity. This Economic Letter distills some key lessons from research on place-based policies drawn from an extensive review of recent research (Neumark and Simpson, forthcoming). Compared with Wilson (2015), we focus on the measured impact of specific types of policies at the local level rather than broader considerations regarding the design of state and local tax incentives for businesses.

Mixed evidence.

One Response to “Do Place-Based Policies Matter?”

  1. iku2e Says:

    Personally that matters a lot

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