Over the past few years, new research and major political and business events have combined to make Americans more attentive to how place shapes economic and social outcomes.
Back in 2013, Raj Chetty and his colleagues published a groundbreaking study showing that where a child grows up has major consequences for his/her chances at upward economic mobility. The results of the 2016 presidential election shone a spotlight on areas of the United States, particularly smaller towns and large swaths of the Midwest, that felt disconnected from the prosperity other parts of the country were enjoying.
The underlying trend toward greater disparities across places isn’t all that new. Research shows that beginning in the mid-1980s, wage and employment growth in the most prosperous metropolitan areas began to significantly outpace that in other metro areas. Research further shows that this trend has affected small, rural communities most negatively, especially in the last decade, with significant attendant political consequences. So a consensus is forming that place matters for economic policy; and evidence is mounting that the largest places are succeeding while smaller ones are not.
What should government’s policy response be? An example of the increased awareness and changing thinking on the topic is the writing of noted urban economist Ed Glaeser: while he decried the expenditure of federal dollars to support struggling cities like Buffalo, N.Y. in 2007, by 2018, he had co-authored a Brookings report recommending that the federal government provide place-based employment subsidies to individuals in areas of high unemployment.
Policy consensus seems to be emerging that aims to strike a middle ground between a focus on enabling people to relocate to places with greater economic opportunity and the notion that public spending can and should prop up highly economically distressed small towns all across the American landscape.
Read more Alan Berube’s complete essay on Brooking’s website: