Economic Development Quarterly

Latest Research Featured in Economic Development Quarterly

November 2023; volume 37 issue 4 https://journals.sagepub.com/home/edq

Economic Development Quarterly (EDQ) devoted its August and November issues to the important topic of inclusive economic development. Inclusive economic development policies promote equitable, participatory, and sustainable growth by identifying policies that reduce economic, financial, physical, and social barriers facing vulnerable populations.

The Covid-19 pandemic put the importance of inclusive economic development front and center, and the federal response, the Paycheck Protection Program (PPP), was reportedly the largest economic development initiative since the Great Depression. The program provided nearly $800 billion to nearly 9 million businesses across the nation during 2020 and 2021. It was appropriate, therefore, that the first volume of this series (the August issue) was devoted to the PPP.

Demko and Sant’Anna, in their “Impact of Race, Ethnicity, and Gender on the SBA Paycheck Protection Program Loan Amounts,” found consistent disparities in the size of the loans approved to non-White, Hispanic, and female-owned small businesses compared to their business counterparts of the same size. The disparities lessened during the later rounds of the PPP; however, evidence suggests that female and Hispanic owners continue to receive fewer PPP loans than male and non-Hispanic owners. These disparities were likely caused by lack of access and knowledge in addition to the overall focus of just getting the PPP money out to the business community using established channels in the banking community.

Barkley and Schweitzer take a longer view of the accessibility of small businesses to obtain loans in their paper, “Credit availability for Minority Business Owners in an Evolving Credit Environment.” Examining small-business credit histories from 2016 to 2020, as reported in the Federal Reserve Small Business Credit Survey, they found that the rise of fintech lenders did not close the gap in credit disparities. Their findings will likely be very useful in future efforts to reform the existing Community Reinvestment Act.

Lester and Wilson compared PPP loan activity with existing residential and small business lending patterns and found that, while businesses in minority neighborhoods received fewer PPP loans, program changes in the third round of the PPP improved its reach into these economically disadvantaged areas. A major finding presented in their paper, “The Racial and Spatial Impacts of the Paycheck Protection Program,” was that the PPP initially followed existing loan networks and relationships that partially excluding low-income and minority neighborhoods. However, policy changes in the program’s third round did lower the disparity in loan activity.

Deming and Weiler, in their paper “Banking Deserts and the Paycheck Protection Program,” explore the impact of the PPP on areas that simply lack access to banking services. They find that businesses located in ill-served “banking deserts” had less access to PPP loans, which only enlarged regional inequalities in both banking and labor markets. 

Finally, Cassell, Schwan, and Schneiburg, in their paper “Bank Types, Inclusivity, and the Paycheck Protection Program Lending During COVID-19,” identified the same disparities in the PPP as uncovered in the other papers. They found that traditional banking networks allocated PPP loans more heavily in low poverty and less diverse areas. Their analysis also found that fintechs and, especially, Community Development Financial Institutions, were more proactive in engaging businesses in low-income areas.

In short, the implication of the PPP was initially focused on getting money out to struggling firms using existing banking networks and relationships, which did little to improve credit access to minority and women-owned businesses; however, the last third round of the program partially addressed these disparities through better targeting.

Papers in the November issue tackle other important aspects of inclusive economic development.

In their paper, “The Evolution and Landscape of Under-Resourced Communities in U.S. Metropolitan Areas,” Hall, Wial, and Yee present a new statistical measure of spatial concentration of poverty in identifying under-resourced communities (URCs). Moreover, using 20 years of census data, the authors trace the growth and changing spatial and demographic composition of a metro’s URCs. The authors find that under-resourced areas, while still present in the urban core, are expanding into suburban areas and are becoming more racially diverse.  

Florida and Gabe, in their paper “COVID-19, the New Urban Crisis, and Cities: How COVID-19 Compounds the Influence of Economic Segregation and Inequality on Metropolitan Economic Performance.” examine the impact of the pandemic on changes in affordable housing, economic inequality, and residential segregation that make up their measure of urban crisis in the nation’s metro areas. They find that areas that were under economic distress before the pandemic were less resilient in recovering from the economic shocks associated with COVID-19.

Armstrong and Reynolds, in their paper “A Middle Model of Economic Development? Revisiting the Economic Geography of Middle-Wage Occupations in the United States,” look for shared characteristics of metro areas that have enjoyed growth in middle income workers. In many metro labor markets, higher educated workers gain while workers with less education decline causing a “hollowing out” of the middle of the labor market. Areas that have maintained a healthy middle seem to have higher local school performance and relative growth in the number of production jobs.

Theodore explores the under researched day-labor market in his paper, “Day-Labor Worker Centers: Advancing New Models of Equity and Inclusion in the Informal Economy,” by examining the role of day-labor worker centers. These centers assist workers in the informal economy in gaining higher wages, curtailing wage theft, and promote safer and fairer work conditions. In particular, he reports on the result of two surveys: one regarding the disaster-recovery workers in Houston after Hurricane Harvey and a national survey of existing worker centers that provide emergency assistance to immigrants.

Finally, Lowe, Schrock, Wilson, Rabbani, and Forbes, in their paper, “Centering Work: Integration and Diffusion of Workforce Development Within the U.S. Manufacturing Extension Network,” examine the various strategies used by Manufacturing Extension Partnership (MEP) centers to not only improve the productivity of area manufacturers but also enhance the quality of the frontline manufacturing jobs and strengthen efforts to promote inclusive economic growth, including racial diversity in the workplace.