Employment policy and urban economic development

Abstract

Despite continued national prosperity, the employment and earnings prospects of urban unskilled workers have deteriorated substantially in the past decade. Federal interventions on the supply side of the labor market include training programs and cash assistance. Demand‐side interventions attempt to increase the hiring and training of disadvantaged workers by private employers. The new geographically targeted Empowerment Zone Program combines supply‐and demand‐side interventions with attempts to reduce the isolation of impoverished communities.

Federal training efforts have been modestly effective for adult women, but not for other target groups such as youth. There is some evidence that training subsidies have a positive impact, but wage subsidies are stigmatizing. Past experiences with state enterprise zone programs have not been positive, but the federal program addresses some of the weaknesses of the state programs. Spatially targeted programs show promise as an effective way to assist disadvantaged workers without the stigmatizing effect of individual eligibility determinations.

Keywords:

• Policy
• Labor market
• Mobility