NBER Chapter

The Potential of Public Employment Reallocation as a Place-Based Policy

In The Economics of Place-Based Policies, edited by Cécile Gaubert, Gordon H. Hanson, and David Neumark. Chicago: University of Chicago Press, 2026.

Abstract

This chapter reviews international evidence on the relocation of public employment as a place-based policy. It considers both the creation and relocation of capital cities and programs that decentralize public agencies. The evidence shows that moving government jobs can generate local employment and population gains in receiving places, with effects shaped by the scale, skill mix, and permanence of the relocation. The chapter also examines whether these gains come at the expense of the regions that lose public employment and discusses the mechanisms and policy trade-offs that determine when public-employment reallocation can support regional development.