New research by Institute senior economist Timothy J. Bartik finds that faster local job growth is much more effective in lowering local unemployment rates in economically distressed communities. State and local policymakers often argue for economic development policies as a way to help local workers, by creating new jobs which may lower unemployment and raise wages. But new jobs may also go to in-migrants, which will reduce local benefits even if economic development policies successfully create jobs. In this new research, Bartik finds that economic benefits of local job creation policies are about twice as great in high unemployment communities as in low unemployment communities. If jobs are in short supply, local labor market policies focused on job creation will have greater benefits, whereas in communities with healthier economies, labor market policies to raise earnings may need to broaden to a greater emphasis on labor supply policies to improve skills.
Experts
