New Estimates of the Impact of EDA Public Works Program Investments on County Labor Markets

Abstract

The U.S. Department of Commerce’s Economic Development Administration (EDA) makes public works investments in distressed areas throughout the nation. In this study, these investments are found to have significantly positive effects on county employment levels after controlling for a variety of geographic, economic, and demographic factors. The investments have no significant effect on employee compensation. The estimates indicate that EDA public works investment provides counties with jobs at relatively low cost, suggesting that such investments are an effective means of job creation and retention in targeted counties. The article’s final section qualifies this conclusion somewhat, discussing the possibility that EDA investments act as a proxy for a coordinated local economic development strategy and evaluating the potential benefits of ameliorating regional decline.

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