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Title: The Economics of Place-Making Policies

Citation Type: Working Paper

Publication Year: 2008

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Abstract: Should the national government undertake policies aimed at strengthening the economies ofparticular localities or regions? Agglomeration economies and human capital spillovers suggestthat such policies could enhance welfare. However, the mere existence of agglomerationexternalities does not indicate which places should be subsidized. Without a better understandingof nonlinearities in these externalities, any government spatial policy is as likely to reduce as toincrease welfare. Transportation spending has historically done much to make or break particularplaces, but current transportation spending subsidizes low-income, low-density places whereagglomeration effects are likely to be weakest. Most large-scale place-oriented policies have hadlittle discernable impact. Some targeted policies such as Empowerment Zones seem to have aneffect but are expensive relative to their achievements. The greatest promise for a national place basedpolicy lies in impeding the tendency of highly productive areas to restrict their own growththrough restrictions on land use.

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Authors: Gottlieb, Joshua D.; Glaeser, Edward L.

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Publication Number: 2166

Institution: Harvard University

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Publisher Location: Cambridge, MA

Data Collections: IPUMS USA

Topics: Other

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