When hit by recessions or other economic shocks, some communities have persistently low rates of economic growth that cause them to fall behind the rest of the country. The recovery period for these distressed communities is longer and more painful than necessary. Communities that were disproportionately hit by the 1980–82 recessions still have not recovered and to this day have lower incomes, lower employment rates, and lower income growth than other areas. In addition to these negative economic effects, concentrated poverty may increase social problems like crime. Distressed communities continue to suffer, in part because of a mismatch between the skills of local workers and the needs and wants of business and industries.
To address this situation, we propose a three-pronged approach: attract businesses to distressed areas, invest in displaced workers, and match workers to jobs. A component of all these approaches is a commitment to rigorous evaluation of the policies themselves. A failure to evaluate these policies would be a missed opportunity to demonstrate policies that work, and would continue to disadvantage residents of communities that suffer distress. Addressing the problems of distressed communities is particularly relevant today as a result of the Great Recession that began in 2007.
Additional Policy Papers:
The Mobility Bank: Increasing Residential Mobility to Boost Economic Mobility, by Jens Ludwig and Steven Raphael
Retraining Displaced Workers (PDF), by Robert LaLonde and Daniel Sullivan