When Spatial Equilibrium Fails: Is Place-Based Policy Second Best?

Regional Studies

Volumn 49, Issue 8, 2015, Pages 1303-1325

  Partridge, Mark D ^a   Rickman, Dan S ^b   Olfert, M Rose ^c   Tan, Ying ^b  

^a OHIO STATE UNIVERSITY   (United States)

^b OKLAHOMA STATE UNIVERSITY   (United States)

^c UNIVERSITY OF SASKATCHEWAN   (Canada)

Author keywords

Labour mobility; Place based policy; Spatial equilibrium

Indexed keywords

EID: 84937518618     PISSN: 00343404     EISSN: 13600591     Source Type: Journal    
DOI: 10.1080/00343404.2013.837999     Document Type: Article

References (120)

1. D.Albouy (2012) Evaluating the efficiency and equity of federal fiscal equalization, Journal of Public Economics 96(9–10), 824–839. doi: 10.1016/j.jpubeco.2012.05.015
2. G.M.Artz and L.Yu (2009) How You Gonna Keep ’em Down on the Farm: Which Land Grant Graduates Live in Rural Areas? Department of Economics Staff Research Papers. Iowa State University, Ames, IA.
3. D.H.Autor, D.Dorn and G.H.Hanson (Forthcoming 2013) The China Syndrome: local labor market effects of import competition in the United States, American Economic Review.
4. R.Bande, M.Fernandez and V.Montuenga (2008) Regional unemployment in Spain: disparities, business cycle and wage setting, Labour Economics 15(5), 885–914. doi: 10.1016/j.labeco.2007.07.009
5. F.Barca (2009) An Agenda for a Reformed Cohesion Policy: A Place-Based Approach to Meeting European Union Challenges and Expectations. Independent report prepared at the request of the European Commissioner for Regional Policy, Danuta Hübner. European Commission, Brussels.
6. F.Barca, P.McCann and A.Rodríguez-Pose (2012) The case for regional development intervention: place-based versus place-neutral approaches, Journal of Regional Science 52, 134–152. doi: 10.1111/j.1467-9787.2011.00756.x
7. T.J.Bartik (1991) Who Benefits from State and Local Economic Development Policies? W. E. Upjohn Institute for Employment Research, Kalamazoo, MI.
8. T.J.Bartik (1993a) Who benefits from local job growth: migrants or the original residents?, Regional Studies 27(4), 297–311. doi: 10.1080/00343409312331347575
9. T.J.Bartik (1993b) Economic Development and Black Economic Success. Upjohn Institute Technical Report Number 93-001. Report originally prepared for the US Department of Commerce, Economic Development Administration, Technical Assistance and Research Division, January.
10. T.J.Bartik (1994) The effects of metropolitan job growth on the size distribution of family income, Journal of Regional Science 34(4), 483–501. doi: 10.1111/j.1467-9787.1994.tb00879.x
11. T.J.Bartik (1996) The distributional effects of local labor demand and industrial mix: estimates using individual panel data, Journal of Urban Economics 40, 150–178. doi: 10.1006/juec.1996.0027
12. T.J.Bartik (2001) Jobs for the Poor: Can Labor Demand Policies Help? Russell Sage Foundation and W. E. Upjohn Institute for Employment Research, New York, NY, and Kalamazoo, MI.
13. T.J.Bartik (2005) Solving the problems of economic development incentives, Growth and Change 35(2), 139–166. doi: 10.1111/j.1468-2257.2005.00272.x
14. T.J.Bartik (2009) How Do the Effects of Local Growth on Employment Rates Vary With Initial Labor Market Conditions? Upjohn Institute Working Paper Number 09-148. W. E. Upjohn Institute for Employment Research, Kalamazoo, MI.
15. T.J.Bartik (2012) The future of state and local economic development policy: what research is needed?, Growth and Change 43(4), 545–562. doi: 10.1111/j.1468-2257.2012.00597.x
16. K.Bartz and N.Fuchs-Schündeln (2012) The role of borders, languages, and currencies as obstacles to labor market integration, European Economic Review 56, 1148–1163. doi: 10.1016/j.euroecorev.2012.05.008
17. C.Bayer and F.Jüßen (2007) Convergence in West German regional unemployment rates, German Economic Review 8(4), 510–535. doi: 10.1111/j.1468-0475.2007.00416.x
18. P.Bayer, N.Keohane and C.Timmins (2009) Migration and hedonic valuation: the case of air quality, Journal of Environmental Economics and Management 58, 1–14. doi: 10.1016/j.jeem.2008.08.004
19. D.Beckstead, W.M.Brown and G.Gellatly (2008) The left brain of North American cities: scientists and engineers and urban growth, International Regional Science Review 31(3), 304–338. doi: 10.1177/0160017608318521
20. R.B.Blake (2003) Regional and Rural Development Strategies in Canada: The Search for Solutions. Royal Commission on Renewing and Strengthening Our Place in Canada, Ottawa, ON.
21. O.J.Blanchard and L.F.Katz (1992) Regional Evolutions, Brookings Papers on Economic Activity 1, 1–61. doi: 10.2307/2534556
22. R.Boadway and F.Flatters (1982) Efficiency and equalization payments in a federal system of government: a synthesis and extension of recent results, Canadian Journal of Economics 15(4), 613–633. doi: 10.2307/134918
23. R.Bolton (1992) ‘Place prosperity vs people prosperity’ revisited: an old issue with a new angle, Urban Studies 29(2), 185–203. doi: 10.1080/00420989220080261
24. J.Bound and H.J.Holzer (2000) Demand shifts, population adjustments, and labor market outcomes during the 1980s, Journal of Labor Economics 18(1), 20–54. doi: 10.1086/209949
25. A.Bowman (2012) The mobility of immigrants and natives: evidence from internal migration following job displacement, Regional Studies 45(3), 283–297. doi: 10.1080/00343400903431003
26. L.Broersma and J.van Dijk (2002) Regional labour market dynamics in the Netherlands, Papers in Regional Science 81, 343–362. doi: 10.1007/s101100200126
27. K.M.Cheng, N.Durmaz, H.Kim and M.L.Stern (2012) Hysteresis vs. natural rate of US unemployment, Economic Modelling 29, 428–434. doi: 10.1016/j.econmod.2011.11.012
28. D.E.Clark, W.E.Herrin, T.A.Knapp and N.E.White (2003) Migration and implicit amenity markets: does incomplete compensation matter?, Journal of Economic Geography 3, 289–307. doi: 10.1093/jeg/3.3.289
29. D.Coen-Pirani (2010) Understanding gross worker flows across U.S. states, Journal of Monetary Economics 57(7), 769–784. doi: 10.1016/j.jmoneco.2010.08.001
30. M.S.Crandall and B.A.Weber (2004) Local social and economic conditions, spatial concentrations of poverty, and poverty dynamics, American Journal of Agricultural Economics 86(5), 1276–1281. doi: 10.1111/j.0002-9092.2004.00677.x
31. R.Crescenzi and A.Rodríguez-Pose (2012) Infrastructure and regional growth in the European Union, Papers in Regional Science 91(3), 487–513.
32. S.J.Davis, P.Loungani and R.Mahidhara (1997) Regional Labor Fluctuations: Oil Shocks, Military Spending, and Other Driving Forces. International Finance Discussion Papers Number 578. Board of Governors of the Federal Reserve System.
33. J.Decressin and A.Fatás (1995) Regional labor market dynamics, European Economic Review 39, 1627–1655. doi: 10.1016/0014-2921(94)00102-2
34. M.Dickie and S.Gerking (1989) Interregional wage differentials in the United States: a survey, in J.van Dijk, H.Folmer, H.W.Herzog and A.M.Schlottmann (Eds) Migration and Labor Market Adjustment, pp. 111–145. Kluwer, Dordrecht.
35. J.M.Dumond, B.T.Hirsch and D.A.Macpherson (1999) Wage differentials across labor markets and workers: does cost of living matter?, Economic Inquiry 37(4), 577–598. doi: 10.1111/j.1465-7295.1999.tb01449.x
36. R.W.Eberts and J.A.Stone (1992) Wage and Employment Adjustment in Local Labor Markets. W. E. Upjohn Institute for Employment Research, Kalamazoo, MI.
37. Economic Development Research Group, Inc. (ERG) and MIT Department of Urban Studies & Planning (2007) Sources of Regional Growth in Non-Metro Appalachia. Vol. 3 of Statistical Studies of Spatial Economic Relationships (available at: http://www.arc.gov/research/ResearchReports.asp?F_Category=3) (accessed on 23 July 2010).
38. M.W.L.Elsby, B.Hobijn and A.Sahin (2010) The labor market in the Great Recession, Brookings Papers on Economic Activity Spring, 1–69. doi: 10.1353/eca.2010.0001
39. EURACTIV (2012) EU Cohesion Policy 2014–2020. Originally published 1 February 2011, updated November 2012 (available at: http://www.euractiv.com/regional-policy/eu-cohesion-policy-2014-2020-linksdossier-501653?display=normal) (accessed on 4 February 2013).
40. T.Farole, A.Rodríguez-Pose and M.Storper (2011) Cohesion policy in the European Union: growth, geography, institutions, Journal of Common Market Studies 49(5), 1089–1111. doi: 10.1111/j.1468-5965.2010.02161.x
41. P.Fredriksson (1999) The dynamics of regional labor markets and active labor market policy: Swedish evidence, Oxford Economic Papers 51(4), 623–648. doi: 10.1093/oep/51.4.623
42. S.A.Gabriel, J.Shack-Marquez and W.L.Wascher (1993) Does migration arbitrage regional labor market differentials, Regional Science and Urban Economics 23(2), 211–233. doi: 10.1016/0166-0462(93)90004-X
43. J.H.Gallin (2004) Net migration and state labor market dynamics, Journal of Labor Economics 22(1), 1–21. doi: 10.1086/380401
44. P.Garcia-del-Barrioa and L.A.Gil-Alana (2009) New revelations about unemployment persistence in Spain: time-series and panel data approaches using regional data, Applied Economics 41, 219–236. doi: 10.1080/00036840600994237
45. E.L.Glaeser and J.D.Gottlieb (2008) The economics of place-making policies, Brookings Papers on Economic Activity Spring, 155–239. doi: 10.1353/eca.0.0005
46. E.L.Glaeser and J.Gyourko (2005) Urban decline and durable housing, Journal of Political Economy 113(2), 345–375. doi: 10.1086/427465
47. M.Goldenberg (2008) A Review of Rural and Regional Development Policies and Programs. Research Report, March. Canadian Policy Research Networks, Inc.
48. F.A.R.Gomes and C.G.Da Silva (2009) Hysteresis versus NAIRU and convergence versus divergence: the behavior of regional unemployment rates in Brazil, Quarterly Review of Economics and Finance 49, 308–322. doi: 10.1016/j.qref.2007.03.009
49. I.Gordon (1988) Evaluating the effects of employment changes on local unemployment, Regional Studies 22, 135–147. doi: 10.1080/00343408812331344840
50. W.L.Gordon (1957) Final Report of the Royal Commission on Canada's Economic Prospects. Queen's Printer, Ottawa, ON.
51. M.J.Greenwood, G.L.Hunt, D.S.Rickman and G.I.Treyz (1991) Migration, regional equilibrium, and the estimation of compensating differentials, American Economic Review 81(5), 1382–1390.
52. N.Groenewold (1997) Does migration equalize regional unemployment rates? Evidence from Australia, Papers in Regional Science 76(1), 1–20. doi: 10.1111/j.1435-5597.1997.tb00678.x
53. R.Hall (1992) Comments and discussion, Brookings Papers on Economic Activity 1, 62–65.
54. A.Hanson (2009) Local employment, poverty, and property value effects of geographically-targeted tax incentives: an instrumental variables approach, Regional Science and Urban Economics 39, 721–731. doi: 10.1016/j.regsciurbeco.2009.07.002
55. A.Hanson and S.Rohlin (2011a) Do location-based tax incentives attract new business establishments?, Journal of Regional Science 51(3), 427–449. doi: 10.1111/j.1467-9787.2010.00704.x
56. A.Hanson and S.Rohlin (2011b) Location and employment across industry sectors: the effect of location-based tax incentives on establishment, Public Finance Review 39(2), 195–225. doi: 10.1177/1091142110389602
57. A.Hanson and S.Rohlin (2013) Do spatially targeted redevelopment programs spill-over?, Regional Science and Urban Economics 43(1), 86–100. doi: 10.1016/j.regsciurbeco.2012.05.002
58. J.R.J.HinesJ. R. Jr (2010) State fiscal policies and transitory income fluctuations, Brookings Papers on Economic Activity Fall, 313–350. doi: 10.1353/eca.2010.0017
59. H.J.Holzer (1993) Structural/frictional and demand deficient unemployment in local labor markets, Industrial Relations 32(3), 307–328.
60. G.L.Hunt (2006) Population–employment models: stationarity, cointegration, and dynamic adjustment, Journal of Regional Science 46(2), 205–244. doi: 10.1111/j.0022-4146.2006.00439.x
61. T.Hyclak (1996) Structural changes in labor demand and unemployment in local labor markets, Journal of Regional Science 36(4), 653–663. doi: 10.1111/j.1467-9787.1996.tb01123.x
62. A.M.Isserman and T.Rephann (1995) The economic effects of the Appalachian Regional Commission, Journal of the American Planning Association 61, 345–364. doi: 10.1080/01944369508975647
63. J.F.Jimineo and S.Bentolila (1998) Regional unemployment persistence, Labour Economics 5, 25–51. doi: 10.1016/S0927-5371(96)00019-X
64. P.Kline and E.Moretti (2013) Place-Based Policies with Unemployment. IZA Discussion Paper Series Number 7180. Institute for the Study of Labor (IZA), Bonn.
65. D.J.Krupka and D.S.Noonan (2009) Empowerment zones, neighborhood change and owner-occupied housing, Regional Science and Urban Economics 39, 386–396. doi: 10.1016/j.regsciurbeco.2009.03.001
66. M.A.León-Ledesma (2002) Unemployment hysteresis in the US states and the EU: a panel approach, Bulletin of Economic Research 54(2), 95–103. doi: 10.1111/1467-8586.00141
67. W.Levernier, M.D.Partridge and D.S.Rickman (2000) The causes of variation of regional variations in U.S. poverty: a cross-county analysis, Journal of Regional Science 40(3), 473–497. doi: 10.1111/0022-4146.00184
68. E.López-Bazo, T.Del Barrio and M.Artis (2005) Geographical distribution of unemployment in Spain, Regional Studies 39(3), 305–318. doi: 10.1080/00343400500087034
69. S.T.Marston (1985) Two views of the geographic distribution of unemployment, Quarterly Journal of Economics 100(1), 57–79. doi: 10.2307/1885735
70. R.Martin (1997) Regional unemployment disparities and their dynamics, Regional Studies 31(3), 237–252. doi: 10.1080/00343409750134665
71. D.A.McGranahan, T.Wojan and D.M.Lambert (2011) The rural growth trifecta: outdoor amenities, creative class and entrepreneurial context, Journal of Economic Geography 11, 529–557. doi: 10.1093/jeg/lbq007
72. J.Mintz and M.Smart (2003) Brooking No Favorites: A New Approach to Regional Development in Atlantic Canada. C. D. Howe Institute Commentary Number 192 (available at: http://www.cdhowe.org).
73. E.Moretti (2010) Local Labor Markets. NBER Working Paper Series Number 15947. National Bureau of Economic Research (NBER), Cambridge, MA.
74. M.J.Notowidigdo (2011) The Incidence of Local Labor Demand Shocks. NBER Working Paper Number 17167. National Bureau of Economic Research (NBER), Cambridge, MA.
75. M.Obstfeld and G.Peri (1998) Regional non-adjustment and fiscal policy, Economic Policy: A European Forum no. 26, 205–247. doi: 10.1111/1468-0327.00032
76. Organization of Economic Development and Cooperation (OECD) (2009a) How a Region Grows. OECD, Paris.
77. Organization of Economic Development and Cooperation (OECD) (2009b) A Review of Local Economic and Employment Development Policy Approaches in OECD Countries. OECD, Paris (available at: http://www.oecd.org/document/17/0,3343,en_2649_34417_42750737_1_1_1_1,00.html) (accessed on 25 July 2010).
78. A.J.Oswald and S.Wu (2011) Well-being across America, Review of Economics and Statistics 93(4), 1118–1134. doi: 10.1162/REST_a_00133
79. H.G.Overman and D.Puga (2002) Unemployment clusters across European regions and countries. Economic Policy 34, 115–147. doi: 10.1111/1468-0327.00085
80. M.D.Partridge and D.S.Rickman (1997a) The dispersion of US state unemployment rates: the role of market and non-market equilibrium factors Regional Studies 31(6), 593–606. doi: 10.1080/00343409750131721
81. M.D.Partridge and D.S.Rickman (1997b) State unemployment differentials: equilibrium factors vs. differential employment growth, Growth and Change 28(Summer), 360–379. doi: 10.1111/j.1468-2257.1997.tb00984.x
82. M.D.Partridge and D.S.Rickman (1998) Regional differences in chronic long-term unemployment, Quarterly Review of Economics and Finance 38(2), 193–215. doi: 10.1016/S1062-9769(99)80112-4
83. M.D.Partridge and D.S.Rickman (1999) A note on the benefits to current residents of state employment growth: is there an industry mix effect on migration, Journal of Regional Science 39(1), 167–181. doi: 10.1111/1467-9787.00128
84. M.D.Partridge and D.S.Rickman (2003a) Do we know economic development when we see it?, Review of Regional Studies 33(1), 17–39.
85. M.D.Partridge and D.S.Rickman (2003b) The waxing and waning of regional economies: the chicken–egg question of jobs vs. people, Journal of Urban Economics 53, 76–97. doi: 10.1016/S0094-1190(02)00501-6
86. M.D.Partridge and D.S.Rickman (2005) High-poverty nonmetropolitan counties in America: can economic development help?, International Regional Science Review 28(4), 415–440. doi: 10.1177/0160017605278998
87. M.D.Partridge and D.S.Rickman (2006a) The Geography of American Poverty: Is There a Role for Place-Based Policy? W. E. Upjohn Institute for Employment Research, Kalamazoo, MI.
88. M.D.Partridge and D.S.Rickman (2006b) An SVAR model of fluctuations in U.S. migration flows and state labor market dynamics, Southern Economic Journal 72(4), 958–980. doi: 10.2307/20111863
89. M.D.Partridge and D.S.Rickman (2007a) Persistent pockets of extreme American poverty and job growth: is there a place-based policy role?, Journal of Agricultural and Resource Economics 32(1), 201–224.
90. M.D.Partridge and D.S.Rickman (2007b) Persistent rural poverty: is it simply remoteness and scale?, Review of Agricultural Economics 29(3), 430–436. doi: 10.1111/j.1467-9353.2007.00357.x
91. M.D.Partridge and D.S.Rickman (2008a) Place-based policy and rural poverty: insights from the urban spatial mismatch literature, Cambridge Journal of Regions, Economy and Society 1, 131–156. doi: 10.1093/cjres/rsm005
92. M.D.Partridge and D.S.Rickman (2008b) Does a rising tide lift all metropolitan boats? Assessing poverty dynamics by metropolitan size and county type, Growth and Change 39(2), 283–312. doi: 10.1111/j.1468-2257.2008.00420.x
93. M.D.Partridge and D.S.Rickman (2008c) Distance from urban agglomeration economies and rural poverty, Journal of Regional Science 48(2), 285–310. doi: 10.1111/j.1467-9787.2008.00552.x
94. M.D.Partridge and D.S.Rickman (2008d) Who wins from local economic development? A supply decomposition of U.S. county employment growth, Economic Development Quarterly 23(1), 13–27. doi: 10.1177/0891242408322314
95. M.D.Partridge and D.S.Rickman (2009) Canadian regional labour market evolutions: a long-run restrictions SVAR analysis, Applied Economics 41(13–15), 1855–1871. doi: 10.1080/00036840601131789
96. J.E.Payne, B.T.Ewing and E.P.George (1999) Time series dynamics of US state unemployment rates, Applied Economics 31, 1503–1510. doi: 10.1080/000368499323364
97. S.Pekkala and A.Kangasharju (2002) Regional labor markets in Finland: adjustment to total versus region-specific shocks, Papers in Regional Science 81(3), 329–342. doi: 10.1007/s101100200127
98. A.Peters and P.Fisher (2004) The failures of economic development incentives, Journal of the American Planning Association 70(1), 27–37. doi: 10.1080/01944360408976336
99. C.A.Pissarides and I.McMaster (1990) Regional migration, wages and unemployment: empirical evidence and implications for policy, Oxford Economic Papers 42(4), 812–831.
100. President's Appalachian Regional Commission (PARC) (1964) Appalachia: A Report of the President's Appalachian Regional Commission. US Government Printing Office, Washington, DC.
101. D.Puga (2002) European regional policies in light of recent location theories, Journal of Economic Geography 2, 373–406. doi: 10.1093/jeg/2.4.373
102. D.S.Rickman (2011) Focus on the fundamentals, in Developing the Oklahoma Economy, pp. 74–75. The Oklahoma Academy, Oklahoma City, OK.
103. J.Roback (1982) Wages, rent and the quality of life, Journal of Political Economy 90(6), 1257–1278. doi: 10.1086/261120
104. J.Roback (1988) Wages, rents, and amenities: differences among workers and regions, Economic Inquiry 26(1), 23–41.
105. A.Rodríguez-Pose (2010) Economic geographers and the limelight: institutions and policy in the World Development Report 2009, Economic Geography 86(4), 361–370. doi: 10.1111/j.1944-8287.2010.01094.x
106. D.Romero-Ávila and C.Usabiaga (2007) Unit root tests, persistence, and the unemployment rate of the U.S. states, Southern Economic Journal 73(3), 698–716.
107. R.Rowthorn and A.J.Glyn (2006) Convergence and stability in U.S. employment rates, B. E. Journal of Macroeconomics: Contributions to Macroeconomics 6(1), 1–42.
108. R.E.Saks and A.Wozniak (2011) Labor reallocation over the business cycle: new evidence from internal migration, Journal of Labor Economics 29(4), 697–739. doi: 10.1086/660772
109. P.S.Sephton (2009) Persistence in U.S. state unemployment rates, Southern Economic Journal 76(2), 458–466. doi: 10.4284/sej.2009.76.2.458
110. F.M.Song and Y.Wu (1997) Hysteresis in unemployment: evidence from 48 U.S. states, Economic Inquiry 35(2), 235–243. doi: 10.1111/j.1465-7295.1997.tb01906.x
111. M.Tani (2003) Have Europeans become more mobile? A note on regional evolutions in the EU: 1988–1997, Economics Letters 80(1), 23–30. doi: 10.1016/S0165-1765(03)00067-3
112. G.I.Treyz, D.S.Rickman, G.L.Hunt and M.J.Greenwood (1993) The dynamics of U.S. internal migration, Review of Economics and Statistics 75(2), 209–214. doi: 10.2307/2109425
113. B.Wang and A.Dayanandan (2006) Unit root tests of Canadian poverty measures, Economics Bulletin 9(2), 1–7.
114. D.E.Whisnant (1994) Modernizing the Mountaineer. University of Tennessee Press, Knoxville, TN.
115. R.R.Widner (1973a) Evaluation of the administration of the Appalachian Regional Development Program, Growth and Change 4, 25–29. doi: 10.1111/j.1468-2257.1973.tb00235.x
116. R.R.Widner (1973b) Transport investment and Appalachian development, Public Administration Review 33, 225–235. doi: 10.2307/974800
117. R.R.Widner (1990) Appalachian development after 25 years: an assessment, Economic Development Quarterly 4, 291–312. doi: 10.1177/089124249000400401
118. L.Winnick (1966) Place prosperity vs people prosperity: welfare considerations in the geographic redistribution of economic activity, in Essays in Urban Land Economics in Honor of the Sixty-fifth Birthday of Leo Grebler, pp. 273–283. Real Estate Research Program, University of California at Los Angeles, Los Angeles, CA.
119. J.V.Winters (2009) Wages and prices: are workers fully compensated for cost of living differences?, Regional Science and Urban Economics 39, 632–643. doi: 10.1016/j.regsciurbeco.2009.05.001
120. J.H.Yeo, K.A.Sung and D.W.Holland (2005) Labor market behavior in Washington: a cointegration approach, Annals of Regional Science 39, 317–335. doi: 10.1007/s00168-004-0223-8