Migration, Depressed Regions, and Place-Based Policy

Place-based policies in large and persistently lagging regions face many challenges. Persistently lagging regions may require such large investments to reverse a downward trend as to be politically infeasible. In regions that have become economically obsolete, place-based policies cannot be justified by appealing to economic efficiency, unless problems are due to market failures. It may, however, be possible to justify policies on social or political grounds, as is the case with the EU’s cohesion policies. Migration as an economic adjustment mechanism has an ambiguous effect on lagging regions. Because the young and skilled are most likely to find success elsewhere, it often results in the loss of emerging economic, civic, and political leadership. The disproportionate loss of young people also causes demographic disequilibria that reduce prospects for recovery. The long-term stagnation of four West Virginia counties in a region that benefits from place-based federal policies, illustrate the challenges.