Federal Economic Development Assistance Programs

An Econometric Analysis of Their Employment Effects, 1974-78 Gao ID: OCE-84-5 August 15, 1984

In response to a congressional request, GAO developed an econometric model to provide consistent estimates of the employment effects of GAO-surveyed economic development programs.

Based on estimates from this model, GAO concluded that the programs did create jobs during the 1974-78 period. The number of jobs created varied by industrial classification and by each state's overall level of employment growth. Several economic development programs funded projects that directly employed construction workers. However, the construction industry experienced low growth during the 1974-78 period, and construction projects financed by these programs tended to be capital- rather than labor-intensive. GAO found that most jobs were created in the manufacturing sector of the economy, regardless of whether aid was provided in the form of grants, direct loans, or loan guarantees. Among the various grant categories, public works grants were the most effective in creating jobs. GAO also found that grants were most effective in creating jobs in states with low employment growth.

The Justia Government Accountability Office site republishes public reports retrieved from the U.S. GAO These reports should not be considered official, and do not necessarily reflect the views of Justia.