Industrial and workforce composition vary widely among regions as do wages, unemployment rates, and other labor market conditions. These differences often are reflected in state and local economic policies targeted at specific regional needs. Principal among these are policies to promote economic development through business subsidies, to support R & D through university-based research programs, and to strengthen human resources through education and training programs.
States also have major regulatory responsibilities in the employment area including occupational certification and licensure, anti-discrimination policies, and sometimes minimum wages, all of which can affect economic development. In addition, states are deeply involved in labor-management policies that can influence business location decisions including those governing public-sector collective bargaining, the resolution of labor disputes, and the determination of permissible union security arrangements in the private sector. Finally state and local governments represent a source of employment and workforce training and can serve as models for best-practice human-resource development.
Regional Economic Development/Adjustment is a cross-cutting cluster dealing with workforce issues and policy research that lie at the intersection of four research themes: business and industrial performance, state and local economic development, labor markets, and human-resources development.
It seeks to look beyond the traditional drivers of state and local economic development, such as trends in the national economy or the existing mix of industries in the region, in order to understand the broader dynamics of why states and localities grow at different rates and in different ways; how established regional advantages can be strengthened and new advantages can be created; how business and workforce institutions can shape regional development, and how economic transitions can be managed so as to reduce the social and economic costs of declining industries and regions.
The Regional Development/Adjustment cluster looks for sound policy guidance from this research. Business subsidies often are criticized for having excessive costs relative to their long-term benefits and for encouraging zero-sum competition among regions for new jobs; governments have difficulty in identifying the comparative advantages of their states and localities and in “picking winners” when deciding which firms and industries should be the target of their development efforts; and adjustment programs can be faulted for their limited effects on re-employability and for failing to adequately address the needs of communities hit hard by economic decline.
There may also be organizational impediments to successful adjustment programs because development policies are fragmented among many different agencies and because business and government sometimes fail to understand each other’s cultures. Fresh thinking is needed to fashion better industrial, human resources and regional development policies; to identify major policy gaps and impediments to growth; and to foster a more-equitable distribution of the employment and income gains generated by regional development.