Survey of Evidence on Benefits of Industrial Policy Interventions for “Left-Behind” Workers Finds Mixed Evidence

Study Suggests That Details of Implementation Matter

Place-based industrial interventions—policies that promote production and investment in specific regions—are often proposed as a way to improve economic conditions for residents, particularly workers in distressed local labor markets who have been “left behind” by economic change. In a new study, a researcher examined whether localized industrial interventions improve outcomes for target populations—and if so, under what conditions—drawing on empirical evidence from recent research.

The study, by a researcher at Carnegie Mellon University, was released as an NBER Working Paper.

“My work suggests that there is no guarantee that policies that promote production and investment in target regions are effective in improving the outcomes of less well-off residents,” says Andrew Garin, assistant professor of economics at Carnegie Mellon’s Heinz College, who conducted the study. “Rather, interventions that generate opportunities for upskilling and occupational advancement accessible to target populations are most likely to generate meaningful distributional benefits.”

The past decade has seen a resurgence of interest in industrial policy, particularly in advanced economies. Amid cooling geopolitical relations, warming global temperatures, and increased economic competition from developing nations, leaders in the United States and other OECD nations that had embraced laissez-faire production policy have increasingly supported efforts to reshore the supply chain for products central to national security, promote a transition to sustainable energy sources, and develop domestic industries that can withstand global competition.

Advocates of industrial policy efforts frequently point to the potential of interventions to promote production and local job creation in target regions—usually those described as economically distressed. In some cases, promoting business formation and investment in these regions to improve upward mobility for left-behind residents is the primary goal. Drawing on evidence from recent research, Garin examines whether localized industrial interventions improve outcomes for target populations—and if so, under what conditions.

As a focal case study, Garin analyzes one of the most significant industrial interventions in U.S. history—the economic mobilization for World War II in the United States, during which the government paid for the construction of new manufacturing plants producing key war products in dispersed locations around the country. After discussing key features of the institutional setting, he highlights how these contrast with many modern-day industrial interventions. He also estimates the long-term causal impacts of government-funded plant construction on both local labor markets and individual residents.

Government plant construction during WWII drove an expansion of high-wage semi-skilled jobs open to local residents, which in turn fueled an increase in upward mobility among local residents, effectively creating a ladder to the middle class. But evidence from more recent interventions suggests that modern plant sitings often fail to yield similar benefits for local workers. Specifically, many modern initiatives that incentivize large firms to locate or otherwise invest in plants in target regions have not meaningfully increased local incomes or employment rates of left-behind workers, even if they increased the aggregate job count in the region.

Garin concludes that although the pursuit of production goals during WWII happened to generate new opportunities for advancement for a wide class of workers without training, policymakers cannot expect such alignment between industrial policy goals and distributional objectives to exist as a general principle.

“The implementation details of industrial interventions matter crucially for their incidence on local workers,” he adds. “Local industrial interventions benefit residents of target regions most when they promote an expansion of good jobs accessible to underemployed individuals or opportunities for up-skilling and occupational advancement to local workers with minimal training.

“Thus, if current policy initiatives that promote advanced industrial development—such as the CHIPS Act—aim to benefit the local workforce, policymakers must create pathways by which local workers can gain access to the higher-skill, higher-wage positions opening at new plants.”

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Summarized from an NBER Working Paper, Do Place-Based Industrial Interventions Help “Left-Behind” Workers? Lessons from WWII and Beyond, by Garin, A (Carnegie Mellon University). Copyright 2025. All rights reserved.

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The Heinz College of Information Systems and Public Policy is home to two internationally recognized graduate-level institutions at Carnegie Mellon University: the School of Information Systems and Management and the School of Public Policy and Management. This unique colocation combined with its expertise in analytics set Heinz College apart in the areas of cybersecurity, health care, the future of work, smart cities, and arts & entertainment. In 2016, INFORMS named Heinz College the #1 academic program for Analytics Education. For more information, please visit www.heinz.cmu.edu.