What is Giving Compass?
We connect donors to learning resources and ways to support community-led solutions. Learn more about us.
Giving Compass' Take:
• Brookings provides insights into effective place-based policies to support the eastern Heartland of America
• How could these policies support progress in your areas of philanthropic interest? What can funders to advance the needs of these communities?
• Learn why it is time for philanthropy to turn to the heartland.
The economic convergence of American regions has greatly slowed, and rates of long-term nonemployment have even been diverging. Simultaneously, the rate of non-employment for working age men has nearly tripled over the last 50 years, generating a terrible social problem that is disproportionately centered in the eastern parts of the American heartland. Should more permanent economic divisions across space lead American economists to rethink their traditional skepticism about place-based policies?
We document that increases in labor demand appear to have greater impacts on employment in areas where not working has been historically high, suggesting that subsidizing employment in such places could particularly reduce the not working rate. Pro-employment policies, such as a ramped up Earned Income Tax Credit, that are targeted towards regions with more elastic employment responses, however financed, could plausibly reduce suffering and materially improve economic performance.
Federally funded infrastructure projects are perhaps the most popular tool for encouraging local economic development. Yet these projects also have a very mixed record of encouraging local employment (Garin, 2017) and there is an inherent tension between targeting infrastructure towards growing successful areas that need more infrastructure and supporting distressed areas with highly elastic labor supply. America’s most glaring infrastructure deficits are visible in large, busy urban areas where airports, like New York’s John F. Kennedy Airport, are under-maintained and where public transportation and highways are highly congested.
If users are willing to pay for both the operating and capital costs of a project, then it is unlikely to be a white elephant. If modest Federal investment can spur self-financing infrastructure projects in distressed areas then there seems to be little downside risk. But do there exist a large number of such potential projects?
At the broadest level, the nation can be divided into its wealthy, costly coasts, a reasonably successful Western Heartland and a painfully not working Eastern Heartland. These differences are driven mainly by historic differences in human capital and the economic dislocation caused by deindustrialization.