Full Citation

Title: Local Economic Development, Agglomeration Economies and the Big Push: 100 Years of Evidence from the Tennessee Valley Authority

Citation Type: Miscellaneous

Publication Year: 2011

ISBN:

ISSN:

DOI:

NSFID:

PMCID:

PMID:

Abstract: We study the long run eff ects of one of the most ambitious place based economic development policies in U.S. history: the Tennessee Valley Authority. We fi rst conduct an evaluation of the dynamic e ffects of the TVA on local economies in the six decades since its inception. We fi nd that TVA led to short run gains in agricultural employment that were eventually reversed, while impacts on manufacturing employment continued to intensify well after the program had scaled down. This pattern is potentially consistent with the presence of strong agglomeration economies and multiple steady states in the manufacturing sector. However, it is also consistent with models with a unique steady state and slow adjustment. To diff erentiate between these two possibilities, we estimate a simple dynamic county level model of agglomeration that allows for multiple steady states. We fi nd clear evidence of agglomeration eff ects, but no sign that these e ffects arestrong enough to generate multiple steady states, suggesting that the gains to the TVA region will eventually be reversed. Moreover, we fi nd little evidence of nonlinearity in agglomeration economies, implying the aggregate productivity eff ects of place based development policies are probably limited.

User Submitted?: No

Authors: Moretti, Enrico; Kline, Patrick

Publisher: Univesity of California, Berkeley

Data Collections: IPUMS USA

Topics: Labor Force and Occupational Structure, Other

Countries: