JUE Insight: The labor market effects of place-based policies: Evidence from England’s Neighbourhood Renewal Fund

Abstract

Neighbourhood renewal programs are a type of place-based policy that aim to revive underperforming localities. The literature on place-based policies has found mixed results regarding their effects on local labor market outcomes, but there are relatively few studies of policies that aim to improve local labor supply. In this paper we examine the labor market effects of the Neighbourhood Renewal Fund, which targeted 88 of the most deprived areas in England during the early 2000s as part of the Labour government’s National Strategy for Neighbourhood Renewal. The fund disbursed almost £3 billion for spending on community safety, education, healthcare and worklessness, with supply-side interventions making up the bulk of the program’s spending on worklessness. Using a difference-in-differences approach, we find statistically significant impacts on local employment. Our results suggest that policy interventions to improve local labor supply can be a successful strategy for neighborhood renewal.