Economic Development Quarterly

Within the policy area of local economic development, this paper identifies five research needs: 1) better definitions of local labor markets; 2) policy know-how on how local economic development’s benefits can be spread to distressed neighborhoods; 3) evidence on what types of jobs have both good growth prospects and also provide long-run job opportunities for U.S. workers who lack a bachelor‘s degree; 4) estimates of how local worker skill-upgrading programs, or worker attraction programs, affect local labor market outcomes; and 5) more rigorous evaluation of both customized business services provided to individual firms and more comprehensive regional economic development strategies.

The COVID-19 pandemic accelerated three trends that were already transforming economic development theory and practice. A backlash to economic restructuring and inequality, driven by globalization and technology, is now manifesting in reshoring and union movements. The resurgence of small and midsized cities, originally driven by increasing housing costs in coastal cities, has been reinforced by a rise in remote work. The uncertainty of today's complex economy is exacerbating long-term challenges of tracking economic change, making “shoot anything that flies” more important than ever. These trends highlight the need to focus economic development on building and supporting the workforce.

A smart public workforce system requires customized tools to help customers navigate through the complexities of finding a job or finding qualified workers. It also requires that information flow in both directions—from customers to the workforce system and vice versa. This commentary shows some early attempts at constructing algorithms to develop tools and proposes research that is necessary for future refinements. The Workforce Innovation and Opportunity Act (WIOA), the federal program that provides most funds and guidance for the nation's public workforce system, offers some direction for states to follow in constructing various aspects of these tools. The early attempts include a pilot for Georgia, called Frontline Decision Support System (FDSS), and the Value-Added Performance Improvement System (VAPIS) for the state of Michigan. Future research must answer questions such as the efficacy of AI over regression, and how does one go about evaluating such tools.

While several inclusionary economic development policies may appear similar to traditional economic development policies, they are different in focusing on four key concerns. First, they are more focused on creating greater economic opportunities for minorities and people struggling in poverty. Second, they promote policies that positively impact the economic and social well-being of future generations. Third, they encourage environmental and social sustainable development. Finally, the author argues that they should also concentrate on improving workplace conditions for all employees.

Economic development (EcD) introduces new goods and services into a region's portfolio of traded products or expands the productive capabilities of existing members of a region's economic base. And EcD organizations are intermediaries that reduce risk and transaction costs by honestly representing their community and region to potential business investors. There are five closely related yet separate development practices. Four (community, workforce, housing, and commercial and industrial real estate development) create long-term regional EcD assets. While those assets are required for EcD to occur, they are insufficient to generate EcD outputs. Investments resulting in the production of goods and services are also necessary. EcD is a regional activity because the markets for three of the development practices are regional: labor, housing, and commercial and industrial real estate. Finally, EcD is both an art and a science. The art of EcD is connecting the dots that others cannot see. The science is getting deals done. Together they create investment momentum that builds optimism, generates trust, and mitigates risk.

Workforce development systems operate as a linchpin between individuals who desire or need to develop skills that will be remunerated well and will lead to fulfilling careers in the labor market and employers who desire skilled workers who will be productive in the workplace. These systems, however, have been criticized for failings at both ends of the system: they have not served well individuals from underrepresented populations, and they have not been responsive to the changing nature of work and employment relationships. This commentary suggests that these are the most cogent problems to be addressed in future workforce development research. Needed are subgroup analyses of each phase of education and training opportunities: outreach efforts, participation, interest and skill assessments, retention and completion, supportive services, and post-program labor market impacts. Also important will be research into the other side of the market: how can workforce development systems do a better job at inculcating skills that are needed to be productive in the workforce and skills that better meet the future demands of employers?

Residential and employment locational decisions for working households are frequently commingled. Numerous economic and social factors like job accessibility, wage differentials, housing markets, travel time, trip-chaining opportunities, dual employment, and other quality-of-life considerations influence where a household ultimately chooses to reside relative to places of employment. These choices in turn shape commuting patterns within a region. Using the U.S. Census Bureau's LEHD Origin-Destination Employment Statistics (LODES), the authors explore longitudinal changes in the growth of commuting patterns based on commuters traveling 50 miles or more between their place of residence and place of employment for counties in Midwestern states from 2002 to 2019. The authors find that the rate of commuters traveling 50 miles or more appears to have increased in rural areas across several periods and regions. Thus, rural communities concerned about labor supply constraints must take into consideration more expansive geographic labor markets and approach labor force development in partnership across local economic development institutions. In essence, the growth in commuting sheds requires stronger regional partnerships to address the issue.

This commentary reviews the challenges facing both U.S. workers and the central place of work in economic development. As the Great Resignation demonstrates, work is not working well for large portions of the population. The authors review the diversification of workers and the diversification of work arrangements in recent decades, noting the immense challenges the system faces. They then shift focus to solutions, beginning with workplace development, or interventions to improve employment and productivity within the workplace. Finally, the authors consider universal public services and other investments that improve economic outcomes by addressing employees’ needs beyond work.

Arts and journalism enterprises may serve as effective economic development tools for small cities and neighborhoods. The author demonstrates how a new, for-profit, weekly newspaper serving a Minnesota city of 12,000 residents in a county of 36,000 has diversified and energized a depopulated downtown and surrounding region. Through powerful investigative reporting and by investing in and hosting exhibits by area artists, the newspaper has attracted new businesses into adjacent unoccupied retail spaces.

Regional economic development research must engage with empirical questions and policy evaluations and America's underlying anti-urban bias, which shapes American cities and policy. Standard mathematical microeconomic-founded models are a limited guide to analysis and interpretation; empirical work should consider other disciplines in addition to diverse economic perspectives. Underlying structural factors may be difficult to analyze but need attention, including federal and state hostility to cities, fragmented metropolitan forms that maldistribute urban economic output, and structural racism's impact on economies, housing, and labor markets. Doing strong empirical work while de-emphasizing theory building seems the best way to proceed.

The COVID-19 pandemic brought about an unimagined level of federal investment in regional economic development and much greater political attention to its priorities. Economic development researchers have an opportunity to contribute to an array of federally funded and pandemic-inspired regional experiments, many of which reflect shifting concerns about economic development and what constitutes success. Among these include the importance of addressing historical racial, ethnic, and gender inequalities; the value of research and development as a solution to major human problems; the severity of impending workforce shortages in key sectors; the fragility of many highly efficient global supply chains; and the inadequacy of our underinvested economic data infrastructure to help understand these issues. Researchers have a unique opportunity to examine the regional impacts of national issues by improving public investment logic models, advocating for an improved data infrastructure, and providing evidence to address the long-standing tension between growth and equity as competing economic development priorities.

The authors discuss economic development policy facing the burgeoning entrepreneurial ecosystem research. They aim to answer four questions. First, how are entrepreneurial ecosystems different from regional innovation systems and clusters, two related frameworks that had been vastly popular among economic development policy makers prior to the rise of entrepreneurial ecosystems? Second, what are the key findings in the entrepreneurial ecosystem research that can guide economic development policy making? Third, how should economic development policy be adjusted under the entrepreneurial ecosystem approach? Finally, what does the ongoing debate on the geographical boundaries of entrepreneurial ecosystems mean for economic development policy?

Researchers investigating causal estimates of economic development programs face many challenges. This commentary highlights three challenges for future researchers to consider. Specifically, the author discusses how important it is to examine distributional changes and not just mean effects. Additionally, the merits of determining migration effects when studying economic development programs to better understand if original residents benefit from the program are discussed. Finally, the author questions how the pandemic will affect economic development research, particularly relating to how labor markets are defined.

The U.S. federal government operates a myriad of programs aimed at assisting businesses, typically small and midsized firms, to improve their performance. This commentary focuses on nonfinancial business support programs and how these programs use logic models to guide data collection efforts. The first step is to capture robust data supporting the need for information as the foundation for effective performance management by program staff and other stakeholders. The second step requires that program managers outline the intermediate outcomes they track and the program’s ultimate impacts. The final step requires blending data that captures program outputs, intermediate results, and ultimate program outcomes.

Since February 2020, severe economic disruption, policy responses, and behavioral shifts have created an uncertain economic future at the global, national, state, and local levels. In the context of this uncertainty, private and governmental decisions need the best available forecasts of long-term economic and demographic growth and change, and a regional economic modeling framework that allows model users to develop alternative forecasts. This commentary provides 10-year economic and population forecasts for the top 20 U.S. metropolitan areas, using REMI—a comprehensive economic/demographic forecasting model. While it focuses on metropolitan areas, the fundamental demographic and economic factors that guide the future of a region are the same. States, cities, and rural areas have underlying demographic and economic forces that will determine their destiny.