The national value added is shared between productive capital, labor and land. This is one of the oldest and most important questions of political economy. This article uses this grid of analysis to discuss how local public policies benefit one or the other of these three factors, either explicitly or implicitly and silently. We favour a policy mix based on national policies targeted to national aid to individuals (mostly income support, work incentives and mobility) and fungible budgets defined at the local level, after national transfers to the local level. The policy mix at the local level may include schooling policy, transportation policies and urban renewal policies. Instead, direct or indirect transfers to local firms such as geographically-targeted tax reliefs should be banned: they interfere with fair competition and lead to displacement of jobs with little net employment effects.
ASJC Scopus subject areas
- Economics, Econometrics and Finance(all)