Working Papers

Job Creation: A Review of Policies and Strategies

This report provides a broad survey of economic development policies and strategies that seek to create jobs. With the U.S. economy struggling to recover from the Great Recession, job losses and stagnant employment remain pressing challenges across the country and in nearly every community.

Our report is structured according to four major categories through which to view job creation strategies:

Federal- and State-Level Strategies.
This category can be thought of as encompassing strategies used to “grow the economic pie.” They consist of fiscal and investment policies undertaken at the federal or state level to stimulate job creation and economic growth. The primary ways to influence job creation at these levels are: interest rate reductions, government hiring and purchases, infrastructure investments, short-time compensation programs, worker subsidies, and federal hiring credits.
Place-Based Strategies. Much economic development takes place at the local level, with local governments undertaking a range of activities to attract and retain businesses for the purposes of increasing jobs in their locality and increasing the tax base. Local strategies include: provision of local economic data, marketing, tax incentives, industrial protection zones, enterprise zones, and redevelopment areas to target tax benefits and subsidies to businesses in disadvantaged areas.
Business- and Sector-Based Strategies. Which types of firms to target for job creation is an unsettled question. Here, we examine sources of net new job creation through small businesses and high-growth sectors. Specifically, we review subsidized and low-cost loan programs, programs administered by the Small Business Administration and U.S.
Department of Agriculture, government procurement mandates, business incubators, and green job strategies.
Worker-Based Strategies. Finally, we discuss strategies focused on increasing equity and job quality—through local hire, wage increases, and high road policies—as a critical piece of long-term economic health.
We used three general research methods in preparing and structuring this report: literature review; information gathering from a lecture series and separate interviews with economic development scholars and practitioners; and peer review comments from staff at the Institute for Research on Labor and Employment at the University of California, Berkeley.