As the evidence on this topic is limited, we recommend using our local employment multiplier toolkit instead when appraising potential local multiplier effects 👇 buff.ly/x8WXHYT

One challenge is that most of the evidence comes from studies looking at stimulus spending or cuts in spending so it’s not clear whether the findings carry over to day-to-day spend.

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Usually, multipliers are based on theoretical models and assumptions. We take a different approach – looking at evidence from policy evaluations.

We find that changes in public spending can have multiplier effects at the local level but there is not always an effect.
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Multipliers capture the impact that a change in activity in one part of the economy has on other parts of the economy.

For example, changes in public spending will have multiplier effects if public sector workers spend some of their income in the local economy.

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Our recent guest blog from Dr Max Nathan also summarises recent research on public sector relocation 👇
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❓What might this do for local economies?

Our evidence briefing outlines how local policymakers can think about this 👇https://buff.ly/aLrrS1O

We’re working on an evaluation of the UK EZs (more on this later in the year).  We also need more evaluation of which (combinations of) policy levers are most effective, whether impacts vary across different types of area, and on cost-effectiveness. 
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We previously looked at this policy in 2016. Whilst the evidence available has grown substantially over the last 9 years, there are still lots of gaps.

It’s also important to consider the distributional impacts. As with many local growth policies, the benefits of EZs are often capitalised into property values, benefiting property owners over renters.

Policymakers should be clear about their goals. Evidence is mixed on whether local residents benefit so, if this is the goal, an alternative approach may be more effective.

This may be because tax credits and other incentives generally result in small percentage changes in business costs and therefore do not change behaviour. EZs may also lead to displacement – shifting activity around, rather than generating new activity.

Policymakers should be realistic about the likely impacts of EZs. Only half of studies looking at business outcomes and a third of studies looking at labour market outcomes find a positive effect, (similarly) for other outcomes.