Who Wins From Local Economic Development?

The relative effectiveness of local economic development efforts often hinges on the question of who benefits from regional growth. The authors address this issue by decomposing U.S. county-level employment into four supply components: net commuting, the employment (unemployment) rate, the labor force participation rate, and population. They find that over all counties, net commuting represents the largest supply response, although this primarily holds in metropolitan areas. The benefits to original residents, measured as the sum of unemployment and labor force participation responses, are larger in rural counties. They also are larger in central-city counties of the larger metropolitan areas. The greatest benefits are found in persistent-poverty nonmetropolitan counties as well as in mining and manufacturing-dependent nonmetropolitan counties. Finally, sensitivity analysis indicates the importance of geographical scale and periodicity in assessing the issue of who benefits from regional job growth.