New paper: does public sector relocation have halo effects?
Relocating big firms and scientific infrastructure can lead to large spillover effects on local economies, especially over the long run. Can shifting public sector activity also generate halo effects?
Public relocation programmes are more widespread than you might think: Austria, Canada, Denmark, France, Germany, Korea, Mexico, Norway, Spain, Sweden, the UK and Zimbabwe have all tried — or are trying — moving bits of the state around to boost local economic development.
So it’s important to understand how effective these tools are. We have some evidence, but it’s still quite thin.
I have a new CEP working paper — with Henry Overman, Capucine Riom and Maria Sanchez-Vidal — which looks at the early impacts of one of the UK’s biggest recent relocations: the BBC’s move of key departments, and over 1,700 staff, from London to MediaCity in Salford.
Here’s the abstract:
This paper considers the impact of a major public sector relocation: the British Broadcasting Corporation’s partial move from London to Salford, Greater Manchester, starting in 2011. We identify effects of the move using synthetic control methods applied to plant-level data at Local Authority and Travel to Work Area level. Each BBC job creates on average 0.33 additional jobs in the creative industries, rising to 0.55 additional jobs by 2017, and the relocation had an impact on sectoral and firm composition. We find no significant effect on total employment but a small positive effect on Local Authority average wages.
The full paper is here.
If you don’t want to read the whole thing, you have a few options:
- Henry, Capucine, Maria and I wrote an explainer for the Economics Observatory. This was fun to do. We cover the paper, and look at multipliers and cluster-building efforts more broadly — drawing on historical case studies and more recent evidence from across the OECD.
- I gave a short talk on the paper for What Works Growth earlier this month, with Victoria talking through multipliers more broadly — link to the video is here.
- Or you can check out the media coverage — The Observer and the Financial Times have both done nice write-ups.
