May 23, 2019

The Biggest, Richest Cities Won Amazon, and Everything Else. What Now for the Rest?

The authors are similarly skeptical of large-scale infrastructure projects, arguing that such efforts in Europe, called “cohesion policy,” have tended to create nice roads and bridges in remote, poorer areas, while doing little to help incomes and employment rise in those areas over time.

“What’s increasingly clear after the 2016 election is that the forces that have been really good for the economy in the aggregate, like globalization and technological change, create local shocks that are extremely powerful,” Ms. Hendrickson said.

Their work is only the latest in efforts to wrestle with potential policy answers.

In one of a series of papers published by the Hamilton Project, David Neumark of the University of California, Irvine, described a plan in which the federal government could subsidize the wages of newly hired workers in extremely poor areas. The subsidies would be 100 percent at first before tapering off — in hope of pulling more people into the labor force so they can develop skills that will allow them to earn a nonsubsidized wage.

In another, Tracy Gordon of the Urban-Brookings Tax Policy Center argued for rejiggering the formulas to set federal grants related to Medicaid, highway funding and other infrastructure spending so as to better reflect the economic conditions in different places.

And the economists E. Jason Baron, Shawn Kantor and Alexander Whalley argued for expansion of a program meant to ensure that innovations developed at universities are spread to nearby employers.

Steve Case, whose venture capital firm Revolution has worked to advance entrepreneurship outside the big coastal tech hubs, said, “With the Amazon second headquarters, if the result isn’t what people may have wanted, it could still help jump-start a discussion around regional innovation that could lead to better results down the road.

“I’m just eager for it to move into action so there’s less of a feeling of being left behind and more optimism about the future.”

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