Estimating the Impacts of EDA Public Works Program Investments on County Employment

Abstract

Evaluating the effectiveness of government programs is an important topic for economic developers. One popular example is the U.S. Economic Development Administration’s (EDA) Public Works Program, initially established in 1965. Haughwout (1999) found a significant positive impact of EDA public works projects completed in 1990 on county-level employment over the period 1990 to 1994. The authors reexamine whether this effect continues to hold 20 years later by replicating Haughwout’s specification using data from 2010 to 2014. The results are consistent with those originally reported by Haughwout. The authors then extend the analysis by incorporating a spatial econometric approach to examine the existence of potential spillover effects. The results indicate that EDA investments have a significant positive effect on both targeted and neighboring counties’ employment. The findings suggest that public infrastructure investments can be important tools for economic development by positively influencing employment in both the recipient county and neighboring counties.