Urban Studies, Vol. 29, Nos .
3/4, 1992 557-598
Local Economic Policy and Job Creation: A Review
of Evaluation Studies
Paul Foley
PART I . LOCAL ECONOMIC POLICY
AND EVALUATION
1 . Evaluation and Economic Policy
Introduction
Local economic policy evaluation is in-
creasing in importance . A growing number
of commentators are calling for more
evaluation studies of economic develop-
ment policies to be undertaken (House of
Commons Public Accounts Committee,
1986 ; Robinson and Wren, 1987 ; National
Audit Office, 1988 ; Moore and Townroe,
1990 ; Turok, 1990 ; Bovaird et al., 1991) . At
the same time the number of evaluation
studies being undertaken is increasing and
they are becoming progressively more
sophisticated . This paper focuses on a
number of leading evaluation studies which
have examined major economic policy
initiatives such as the Urban Programme,
Enterprise Zones and the Regional Enter-
prise Grant . The types of schemes evalu-
ated during these studies range from large
infrastructure projects, such as Albert Dock
in Liverpool, to small training projects
costing only a few thousand pounds .
Throughout this paper, and the majority of
evaluation studies completed in this area,
the emphasis is primarily on employment
growth and job creation .
The paper is divided into two parts . The
first part (Sections 1 to 3) considers the
background to the growth in evaluation
studies, the methodological difficulties re-
lating to economic evaluation and the
merits of using job creation as a measure of
success in evaluation studies . The second
Paul Foley is at the Department of Town and Regional Planning, University of Sheffield, Sheffield SIO 2TN, UK .
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557
part of the paper (Section 4) consists of a
review of nine major studies which have
been completed in the last eight years . This
review is used to highlight the evolution of
evaluation methodologies. In addition, it
provides an opportunity to consider the
effectiveness of major economic develop-
ment initiatives . Finally, the validity of
comparison between evaluation studies
using job creation as a measure of success is
examined .
Reasons for the Growing Interest in
Economic Policy Appraisal
The process of evaluating policy is not
new. Evaluation of policy has long been
regarded as an important element in im-
proving decision-making and resource al-
location (HM Treasury, 1988) . Evaluation
flourished in the 1960s and early 1970s
(Barnekov et al., 1990) . During the 1970s
texts such as those by Mishan (1972) and
Lichfield et al. (1975) became prominent
and cost-benefit analysis and other evalua-
tion techniques were in vogue . Evaluation
underwent a rapid decline in the late 1970s
and early 1980s as its usefulness was
questioned. Critics argued that it was too
divorced from the policy-making and im-
plementation process (Walsh and Willi-
ams, 1969 ; Self, 1970 ; Paul, 1971 ; Shefer
and Kaess, 1990) . Evaluation has been
broadly defined by Turok (1990) as "moni-
toring and assessment of the impact and
effectiveness of policies and programmes" .
It differs from policy appraisal which "is
the term normally used for an analysis

5 58
before a policy is launched" (HM Trea-
sury, 1988) .
The growing level of recent interest in
economic development policy evaluation
has been founded on a number of factors .
Primary amongst these are :
(1) accountability ;
(2) understanding the impact of policy;
(3) cost-efficiency and cost-effective-
ness .
These factors should not be viewed in
isolation, as each influences the other and
they are influenced by other less substan-
tial factors. Each will be considered briefly.
Hayton (1989) noted that government
proposed (Department of Environment,
1988) that new procedural elements should
be introduced to ensure that economic
development is properly co-ordinated and
scrutinised . To this end, the Local Govern-
ment and Housing Act 1989 requires local
authorities to set out economic develop-
ment proposals, giving a breakdown of
expenditure and a statement of what the
proposed changes will achieve . Whilst such
proposals do not warrant evaluation in
their own right it is probable that compari-
son between proposals or initiatives will be
a high priority if local government is to be
seen to be acting in an efficient and
accountable manner.
The second major reason for the increase
in evaluation studies has been a realisation
amongst policy-makers that they do not
always understand the effects of policy. The
range of initiatives, both formal and infor-
mal, is well known to policy-makers, but
much less is known about the impact of
these policies on employment (Willis, 1983,
p. 73) . Robinson and Wren (1987) noted
that the impact of policies is unknown and
there are too few rigorous evaluative stud-
ies which provide answers to the questions
which policy-makers are now asking about
the effectiveness of policy. Equally, there is
a growing body of opinion questioning
whether policies work as well as claimed
(Storey, 1990) .
The final factor influencing the increase
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PAUL FOLEY
in evaluation studies is the efficiency of
policy. Both the preceding factors gener-
ally result in a consideration of the effici-
ency of policies and initiatives . If central
or local government is to be perceived as
accountable to an electorate it will need to
be seen to acting in the most cost-effective
manner possible . Equally, if the impacts of
policy are more clearly understood it
should be possible to spend money more
efficiently to achieve particular results .
The need for local authorities to be cost-
effective is not new (Foley, 1990) . The
Layfield Committee (Local Government
Finance, 1976) reported in 1976 that local
authorities should be more accountable for
their affairs than other financial institu-
tions . Central government departments are
equally sensitive to charges of inefficiency .
The Financial Management Initiative, in-
troduced in 1983 (Cabinet Office, 1983),
aimed to encourage central government
departments to set objectives, seek to
measure outputs and carry out value-for-
money studies . `Value for money' became
an overriding concern in the 1980s (Lewis,
1986) . The Audit Commission (1983) in-
troduced the `three Es', economy, effici-
ency and effectiveness, as a method of
evaluating value for money . Consideration
of these factors has now been introduced
into the evaluation process in many central
and local government departments .
A major financial consideration cur-
rently preoccupying central and local gov-
ernments suffering from limited resources
is how they can identify the financial
factors (the form of funding, purpose of
funding and degree of selectivity in fund-
ing) which determine the cost-effectiveness
of local economic policies (Wren, 1987) .
At an everyday operational level, these
considerations have been simply articu-
lated in the appraisal process for Urban
Development Grants. The assessment pro-
cess for Urban Development Grant appli-
cations considers public-sector costs
against total costs and benefits secured but
it is clearly stated that in essence the
question is "does this represent good value

LOCAL ECONOMIC POLICY AND JOB CREATION
for money?" (Public Sector Management
Research Unit, 1988, p . 53, sec . 4.1).
Targeting to Use Funds More Effectively
The 1977 White Paper `Policy for Inner
Cities' focused attention on the decline of
inner cities (Moore and Townroe, 1990) .
Unemployment and other measures of
social disadvantage were used as indicators
to allocate the distribution of government
funds such as the Urban Programme, the
Enterprise Zones and other urban initia-
tives such as the Inner City Task Forces
(Moore and Townroe, 1990) . Despite the
funds provided by these and other initia-
tives, relatively high levels of urban unem-
ployment continue . The inner-city prob-
lem was addressed again by government in
the 1988 statement `Action for Cities'
(Cabinet Office, 1988) . The persistence of
the urban unemployment problem 11
years after the first report led government
to question whether policies to alleviate
inner-city unemployment have been
effective.
During the early 1980s it was generally
thought that the benefits of economic
development initiatives would `trickle
down' to the most disadvantaged in the
labour market (Brownill, 1990) . By focus-
ing economic initiatives on geographical
areas with a high proportion of disadvan-
taged groups it was thought that these
groups would receive the benefits of local
economic growth which arise from eco-
nomic development initiatives . For in-
stance in property development schemes it
was assumed that a proportion of local
residents would be employed during the
construction phase, and obtain jobs in the
completed development or benefit from
the spin-off effects of increased local
demand through employment in local
companies which may act as suppliers to
businesses resident in the property .
Debate about the effectiveness of urban
policy and the persistence of high unem-
ployment among disadvantaged inner-city
residents is providing an impetus to target
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55 9
regeneration measures (Turok and Wan-
nop, 1990). Resources for regeneration are
restricted . It is therefore important to
target assistance through schemes which
have the greatest impact on particular
disadvantaged groups in a locality . Re-
stricted resources can only be used in the
most cost-effective manner if there is some
measure of the relative efficiency of differ-
ent schemes . Since the relative efficiency of
different schemes can only be examined
through evaluation, and the number of
substantive evaluation surveys completed
is limited, it is likely the number of
evaluation studies will continue to rise in
the future .
Arguments against Policy Evaluation
Despite the seemingly strong arguments in
favour of policy evaluation it is worth
considering briefly reasons why it may be
unwise to consider evaluation of economic
initiatives . Storey (1990) proposed four
arguments against evaluation . First, it was
suggested that the diversity of initiatives
was so great that no evaluation system
could take them into account . This argu-
ment was countered by the fact that if clear
policy objectives were defined it should be
possible to measure the effectiveness of
policy in achieving these objectives . Sec-
ondly, it was suggested that the problem of
unemployment was so serious that efforts
should be directed exclusively to solving
the problem . The greater accountability
and economic efficiency now required
of central and local government make
this argument unsustainable. Equally, as
Robinson et al. (1987) note, even though
expenditure may be tightly constrained,
choices still need to be made .
The third argument suggested that many
policy initiatives were so new that evalua-
tion would be premature . Storey (1990)
argued that many initiatives are relatively
short-term and so can easily be evaluated .
In addition, it is worth noting that some
recent Department of Trade and Industry
evaluations (the Regional Enterprise

5 60
Grants-Leslie Hays Consultants Ltd,
1990 and Consultancy Initiatives-Segal
Quince Wicksteed, 1989) have been under-
taken within months of their commence-
ment so that the longer-term effect of
policy could be predicted more accurately
and changes could be made in the initia-
tives to enable them to achieve objectives
more efficiently . Finally, Storey (1990)
suggests that some regard evaluation as
extremely difficult . The remainder of this
paper shows that whilst evaluation is diffi-
cult, methodologies are evolving to over-
come most of the complex problems which
arise. Indeed, there is evidence that a
common framework is starting to evolve
which may facilitate comparison between
studies.
2. Evaluation Methodologies and
Typologies
Evaluation Methodologies
The diversity of approaches used to evalu-
ate economic policy is only matched by the
tenacity of researchers in overcoming the
various practical and methodological prob-
lems which have confronted them . Blake
(1973), Hodge and Whitby (1979), Pearce
(1983) and others have all argued that an
assessment of economic policy should in-
corporate a full cost-benefit analysis in-
cluding a complete picture of exchequer
costs, derived from fewer benefit payments
and more taxes (Dilnot and Morris, 1981) .
However, it was noted above that one of
the reasons evaluation fell out of favour in
the late 1970s was that the level of sophis-
tication and complexity developed by
studies became incomprehensible and di-
vorced from the policy process . Grant
(1983) noted that it is difficult and possibly
inappropriate to apply cost-benefit tech-
niques in the evaluation of financial assis-
tance to industry. As a result, few evalua-
tions of this type have been attempted . The
most comprehensive social cost-benefit
study in the area of local economic devel-
opment was undertaken by Hodge and
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PAUL FOLEY
Whitby (1979) on the impact of the Devel-
opment Commission's factory-building
programme in the Eastern Borders .
Local economic evaluation studies have
been undertaken with the aid of either
macro- or micro-economic theory and
techniques (Willis, 1985). Ten years (and
more) ago, macro techniques exemplified
by shift-share, input-output and econo-
metric studies predominated . Shift-share
studies such as those undertaken by Moore
et al. (1977) and Fothergill and Gudgin
(1982) were criticised by Schofield (1979)
for problems related to time-scale and
difficulties in determining the precise ef-
fects of multiple policies . Input-output
models were used to estimate direct and
indirect job creation through recreational
expenditure (Archer, 1973 ; Henderson and
Cousins, 1975 ; Vaughan, 1977) and ad-
vanced factory building (Hubbard, 1982) .
Econometric techniques were first used in
the US on an experimental basis by the
General Accounting Office between 1974
and 1978 (Barnekov et al., 1990) . Their
first study using this method evaluated
more than 50 federal urban programmes
(General Accounting Office, 1984) . Other
evaluations of an econometric nature in
the UK have been undertaken by Ashcroft
and Taylor (1977), Cuthbertson et al.
(1979), Gibbs (1983), Lambert (1983) and
Taffler (1982) . Criticism of the General
Accounting Office model and others has
been levelled at a number of features .
These are, primarily, their inability to
forecast, estimates which do not distin-
guish between direct and indirect jobs, and
the concentration of most models on job
creation when other objectives also exist .
Barnekov et al. (1990) noted that econo-
metric analysis often fails to demonstrate
its technical superiority over the more
eclectic types of job-counting processes
generally applied to measure policy effec-
tiveness . This view has been supported by
Smith (1990) .
Although micro-economic theory and
techniques have been used for some time
in the field of human-capital theory

LOCAL ECONOMIC POLICY AND JOB CREATION
(Becker, 1964 ; Pissardes, 1981), Willis
(1985) argues that they are not so well-
known and used amongst planners and
those concerned with urban and regional
problems . Whilst this was certainly true in
1985, when Willis made this assertion, the
intervening period has witnessed the adop-
tion of micro-economic techniques as the
dominant method of economic policy
evaluation . Area studies such as the
Newcastle evaluation undertaken by
Robinson et al. (1987) and initiative stud-
ies such as the series of publications
developed by the Inner Cities Directorate
of the Department of the Environment
(JURUE, 1986a, 1986b ; PA Cambridge
Economic Consultants, 1987 ; Public Sec-
tor Management Reserch Unit, 1988 ; Poly-
technic of Central London, School of Plan-
ning, 1990 ; Turok and Wannop, 1990)
have all adopted a micro-economic ap-
proach based on interviews with com-
panies or other individuals involved with
an initiative .
More recently, the Department of the
Environment has developed a parallel
series of publications, using multiple case-
studies to describe good practice in urban
regeneration (Jackson et al., 1987 ; JU-
RUE, 1987 ; URBED, 1987 ; Johnstone et
al., 1988 ; JURUE, 1988 ; Warburton and
Wilcox, 1988 ; Pack and Glyptis, 1989 ;
Hayton, 1990 ; Land and Urban Analysis
Ltd, 1990) . It is worth establishing briefly
the difference between these two comple-
mentary series of publications, one evalu-
ating initiatives and the other examining
good practice, since they serve to distin-
guish the difference between the terms
`efficiency' and `effectiveness' which are
commonly used in evaluation .
Most of the publications in the good
practice series explain, at length, that they
are primarily concerned with `efficiency' .
They aim to provide information on good
practice so that initiatives can maximise
output (per given unit of input) or main-
tain the same level of output with reduced
input costs (Barnekov et al., 1990) . The
Inner Cities Directorate studies on the
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56 1
other hand are more concerned with 'effec-
tiveness': "The extent to which policy
objectives are achieved" (HM Treasury,
1988) . In local economic initiatives this
generally means the overall effectiveness of
the initiative in relation to economic ob-
jectives such as the number of jobs created
or retained .
The difference between the two is subtle,
but important, since it leads to the final,
and most important concept in current
evaluation literature : cost-effectiveness .
The difference between effectiveness and
efficiency is clearly demonstrated using
two examples (HM Treasury, 1988) . An
initiative may be very efficient in promptly
paying grants to eligible individuals, but
the grants may not have the desired effect
on their behaviour . Conversely, an initia-
tive may be highly effective in providing
jobs to everyone who enters a scheme, but
if the cost of the initiative was £ 100 000
per person it would not be good value for
money. Effectiveness is defined without
reference to costs, and the concepts of
efficiency and effectiveness can both be
applied to the same final objective (HM
Treasury, 1988, p. 28) .
Clearly, the results which many policy-
makers require are a combination of both
measures : cost-effectiveness . Cost-effec-
tiveness (or economic efficiency as it has
been described elsewhere; Barnekov et al.,
1990) analysis has been defined as "the
form of analysis which compares the cost
of different options which have the same
or similar outputs" (HM Treasury, 1988,
p. 28) .
Many commentators (Bovaird, 1981 ;
Barnekov et al., 1990) have noted that it is
easy to suggest that cost-effectiveness ana-
lysis should be undertaken to determine
the best policies to alleviate particular
problems in the most cost-effective man-
ner possible . However, it is far more
difficult to achieve an appropriate and
accessible evaluation in practice (Barn-
ekov et al., 1990). Whilst it would be
convenient for policy-makers to possess a
ranking or ordering of initiatives by their

562
cost-effectiveness (Boviard, 1981 ; JURUE,
1986a), this `ultimate solution' to the
problem of which initiatives to adopt is
still some way off-and is probably unat-
tainable, as the concluding part of this
paper will describe. Comparisons between
different kinds of initiative are difficult .
Projects usually have different objectives,
diverse time-scales and they take effect in
different ways (Turok and Wannop, 1990) .
Most evaluations are snapshot examina-
tions of the effect of policy at a particular
time and future changes are unknown
(JURUE, 1986b) . Despite these problems
there has been common agreement about
most of the criteria for evaluation .
Approaches to Policy Evaluation :
Typologies
Turok (1990) identifies four different ap-
proaches to policy evaluation. They utilise
different styles and scope for analysis . The
approaches also adopt increasing degrees
of sophistication to monitor the effective-
ness of policy . There is some evidence that
recent studies have slowly evolved in
sophistication in a manner similar to
the increase in sophistication shown in
Turok's (1990) paper .
The basic style of evaluation is the
conventional approach used internally by
many organisations to monitor the effec-
tiveness of programmes in allocating re-
sources and achieving targets set internally .
This is called "Internal review : administra-
tive efectiveness" (Turok, 1990, p . 5) . The
primary concern of this type of evaluation
is to measure performance in delivering
outputs, rather than their eventual eco-
nomic effects or efficiency. This type of
analysis provides no indication of the
impact of the initiative on local economic
conditions .
The second type of evaluation study
is "External review: financial efficiency"
(Turok, 1990, p . 6) . This type of approach
develops measures of performance by re-
lating policy outputs more directly to
resource inputs . It has been argued that
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PAUL FOLEY
this approach places too great an emphasis
on economy in the use of public resources
(leverage ratios are often quoted as an
example) and efficiency in the provision of
public services, rather than their effective-
ness in generating desired economic out-
comes (Cameron, 1990) . The approach has
its roots in private-sector methods which
emphasise the control of costs and inputs
rather than outputs or outcomes . It has
been suggested that such an approach
discourages the long-term process of re-
generation through investment in training,
physical infrastructure and other longer-
term policies (Turok, 1989) .
The third type of evaluation is newer
and less easily defined . This approach is
called "Social accounting" (Turok, 1990,
p. 8) . It is seen as a reaction against the
narrow scope of the preceding accounting
methods (Harte, 1986 ; Geddes, 1988) . The
scope of social accounting is broad, with a
primary concern about effectiveness in
terms of the economic and social outcomes
of policy, not the immediate physical
outcomes or direct financial costs . The
impact of policy on different sectors or
groups is found through empirical investi-
gation. This type of approach involves
investigating the secondary effects of pol-
icy and the variety of distributional conse-
quences for both individuals and organisa-
tions . Such studies also investigate quality
issues such as wages, skills and conditions .
It is argued that the social-accounting
approach will overcome the problem of
policies appearing efficient and cost-effec-
tive in a narrow sense, when they barely
address the problems which they were
intended to address (Matthews, 1991) . It is
also suggested that such an approach may
seek to improve policy efficiency and
effectiveness in a broader sense by making
them more responsive and directly accoun-
table to a community .
The final type of evaluation described by
Turok (1990, p. 10) is "Understanding and
explanation" . This approach is concerned
with obtaining a deeper understanding of
how policies work . They go beyond the
 LOCAL ECONOMIC POLICY AND JOB CREATION
measurement of simple policy impacts and
explore how and why they are produced . It
is argued that this type of evaluation
should go beyond simple 'before-and-after'
snapshot comparisons and look at longitu-
dinal analysis in the processes of economic
growth and change and the forces and
mechanisms which induce it .
3. Problems of Evaluation
The Justification for Employment Creation
and Cost per Job as Measures of Policy
Success
Numerous studies have noted the diverse
nature of economic development initia-
tives, the varying objectives of initiatives
and the dissimilar conditions and charac-
teristics of the localities in which initia-
tives are applied (Willis, 1985 ; JURUE,
1986a ; Cameron, 1990 ; Polytechnic of
Central London, School of Planning,
1990) . Despite this diversity of factors,
most evaluation studies have focused on
job creation and the cost-effectiveness of
job creation because jobs are regarded as
the principal policy objective (Willis,
1983 ; Willis, 1985 ; Cameron, 1990 ; Moore
and Townroe, 1990 ; Turok and Wannop,
1990) . The majority of evaluation studies
have therefore used job creation as their
basic measure of success . All of these
differences have created considerable
problems for those evaluating local eco-
nomic policy . It is worth briefly consider-
ing this diversity before examining why job
creation and costs per job have become the
most prevalent evaluation variables .
The diversity of initiatives and pro-
grammes initiated by central and local
government to promote economic devel-
opment is considerable (Bienkowski et al.,
1986 ; Department of the Environment,
1989) . Since most initiatives have more
than one objective or aim the impact of
even a single initiative can be diverse
(JURUE, 1986a; Cameron, 1990) .
This diversity of objectives can be high-
lighted by a brief selected review of objec-
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563
tives from three central-government
reports. The objectives which these reports
have highlighted are given below .
JURUE (1986a) An Evaluation of Indus-
trial and Commercial Improvement Areas
Increase the number of jobs created or
retained.
Increase private-sector development and
confidence .
Increase in turnover or investment by
local firms .
Improvements to building stock.
Environmental improvements .
Conservation improvements .
Recreational provision .
Department of the Environment (1989)
Inner City Programmes 1987/88 : A Report
on Achievements and Developments
Enhance job prospects and the ability of
residents to compete for them .
Encourage private-sector investment .
Bring land and buildings back into use .
Improve housing conditions .
Encourage self-help and improve social
fabric.
Cabinet Office (1988) Action for Cities
Improve people's job prospects .
Foster enterprise and business activity .
Improve the environment for inner-city
areas and their attractiveness to local
residents and businesses .
To make inner-city areas safe and attrac-
tive places in which to live and work .
It will be noted from this range of objec-
tives that the enhancement of employment
opportunities is just one of the objectives
adopted by central and local government.
This situation is made even more difficult
for those evaluating policy because there is
often a lack of commonality in project
objectives (Polytechnic of Central London,
School of Planning, 1990) and there are
sometimes contradictions within and be-
tween different initiatives (Cameron,
1990) . This problem is compounded by a
number of additional problems . Morison
(1987, p . 19) notes that "policy makers,
hardly surprisingly, are far from clear what
they are trying to maximise-employment,


564 PAUL FOLEY

factory space, inward investment, regional is evaluated (and the results disseminated) .
income, output or productivity" . Equally, However, as Cameron (1990) and others
it is worth highlighting the variety of local (Turok and Wannop, 1990) go on to
conditions that exist, even in areas desig- emphasise, the quality and distribution of
nated as eligible for particular types of jobs amongst those disadvantaged in the
assistance (JURUE, 1986b) . labour market are also important issues .
Many initiatives may not have a direct
impact on employment even when they are
What is a Job and How Long Does it
targeted at promoting company growth .
Last for?
Robinson and Wren (1987) note that assis-
tance can increase productivity, output Policy-makers and evaluation studies are
and profitability, lead to the introduction becoming increasingly interested in the
of new products and processes and in- types of job created by economic initia-
crease research and development, exports tives and the characteristics of those who
and market share. However as JURUE obtain them . However, problems exist in
(1986b, p. 26) record in their evaluation of identifying the precise jobs created by an
the Urban Programme, "for most firms initiative (as opposed to those which might
employment increase is not a primary have been created anyway) . The purpose of
concern, and if it occurs, it is a conse- these studies is usually to identify whether
quence of other changes in the firm" . This newly-created jobs might be suitable for
view of company operating procedures and the unemployed and/or those from disad-
concerns is confirmed by Foley and Green vantaged groups . Guidelines for what con-
(1989). stitutes a suitable job are unclear . Equally,
Despite this diversity in policies, objec- even if a `suitable' job can be created, it is
tives and impacts the majority of evalua- by no means certain that someone who is
tion studies have focused on jobs (Willis, unemployed and/or disadvantaged will ob-
1983, 1985 ; JURUE, 1986b ; Cameron, tain it . Part-time jobs may be beneficial for
1990 ; Turok and Wannop, 1990) . The single parents unable to obtain help with
complexity of issues involved has led child care but generally they are not
individual studies to develop standardised thought to be as beneficial as full-time jobs .
techniques when assessing initiatives. Jobs requiring no skills are also thought to
Over time, it is clear that the studies be more beneficial for the majority of those
themselves are conforming to a common who are disadvantaged in the labour mar-
approach . Throughout most studies, the ket . But these jobs should offer some form
creation of jobs and the cost-effectiveness of further training and advancement if
of job creation have been adopted as the they are to provide maximum benefits for
basis for standardisation . those who obtain them . These character-
The justification for using this measure istics and many others are examined later
has usually been founded on the premise in this paper.
that "the primary objective of spatially Another common problem for many
differentiated aid to industry is to increase evaluation studies is how long a job can be
employment over and above what it would expected to last for . Storey (1990) notes
otherwise have been" (Willis, 1985, p . that this is one of three key issues relating
164) . By standardising evaluation studies to the nature of jobs created ; the other two,
on one variable, the number of jobs briefly discussed above, are job quality and
created, it is suggested that comparisons job allocation . The problems of long-term
can be more easily undertaken . Commen- employment creation are not solely the
tators such as Cameron (1990) have noted domain of evaluation studies . Policy-mak-
that the government has made dramatic ers often have to decide between the
improvements in the way economic policy adoption of initiatives which provide
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LOCAL ECONOMIC POLICY AND JOB CREATION
short-term employment opportunities and
those which offer longer-term, often more
significant, employment effects (Boviard,
1981) .
Problems of comparison are com-
pounded when evaluation studies attempt
to evaluate different types of projects . The
provision of small business units creates a
capital asset with a life of up to 30 years
(Green and Foley, 1986) . The JURUE
study (1986b, p . 3) stated that "compari-
sons between the cost per job of revenue
and capital projects should not be made
since in the latter case the total net capital
cost of an asset with a long life is being
counted against an assessment of jobs
created at one point in time" . In general
longer-term infrastructure projects have
multiple benefits, such as environmental
improvements, confidence-building and
image improvements . These benefits
should obviously increase over time but a
problem for those evaluating these types of
initiatives is what cut-off point to adopt
(Hodge and Whitby, 1979) . The Enterprise
Zone study (PA Cambridge Economic
Consultants, 1987, p . 47) adopted a 10-
year life for each company because the
average life of a firm was believed to be 10
years.
Some of the studies evaluating advance
factory units have used financial-analysis
techniques to provide an indication of the
net present value of a factory (Willis, 1985 ;
JURUE, 1986b ; Turok and Wannop,
1990), thus more easily facilitating a com-
parison between capital and revenue pro-
jects. With this technique, all cash flows
are discounted by a predetermined rate of
interest and resulting present values are
derived (Briscoe, 1988, p . 174) . These
calculations require many assumptions
about the life of the factory, discount rates,
vacancy rates, maintenance costs and resi-
dual values at the end of the period . The
method is effective in deriving a figure
which can be used to represent the present
value of the development, but so many of
the elements estimated in the equation are
likely to change over time and in different
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565
ways in different areas that doubts
must remain about the value of using or
comparing figures derived using this tech-
nique .
Many studies have noted that a simple
snapshot examination of benefits, at one
particular point in time, fails to take some
of the longer-term benefits of an initiative
into account (JURUE, 1986b ; Segal
Quince Wicksteed, 1989 ; Turok and Wan-
nop, 1990) . For instance, assistance to
small businesses suffers the perennial
problem that one of the businesses funded
could become highly successful and be-
come a major employer, effectively off-
setting losses from all the businesses which
have failed in the interim period (Storey,
1990) . Turok and Wannop (1990, p . 65)
note that the duration of employment
created or retained can vary significantly,
depending on the scale and form of assis-
tance provided . Few studies attempt to
calculate how many jobs created over a
short time-period may remain at a later
date. However, a study by Hayton (1990,
p. 64, 92) provides some interesting results
about the duration of jobs obtained by
people from the initiatives he examined .
The study found that at one initiative in
Glasgow, 90 per cent of those who ob-
tained a job were still employed after three
months, this figure had decreased to 70 per
cent after one year . At a different initiative
in London, 80 per cent were still employed
after six months .
Few evaluation studies have incorpor-
ated any progressive job-loss effects into
their calculations to consider the dynamic
nature of employment as shown by Hay-
ton's (1990) study . Willis (1985) uses
figures for the probability of becoming
employed in his study to investigate the
exchequer costs (savings) derived from the
unemployed becoming employed at an
advance factory unit . But none of the
studies has used converse figures, such as
Hayton (1990, noted above) or Green
(1986), to consider the longer-term degra-
dation effect on jobs created by an
initiative.

566
Two evaluation studies (Segal Quince
Wicksteed, 1989 ; Leslie Hays Consultants
Ltd, 1990) are attempting to overcome this
problem by making repeat visits to com-
panies which have received assistance .
This element of these studies is perhaps the
first indication that evaluation studies may
be moving towards Turok's (1990) fourth
type of approach to evaluation : "under-
standing and explanation" . The longitudi-
nal approach adopted by these studies
should certainly offer a better understand-
ing of the process of change within the firm
and the extent to which policy has any
longer-term effects .
It is now commonly accepted that cost-
per-job criteria have been very dominant
in policy evaluation studies (Moore and
Townroe, 1990, p . 49) . Nearly all of these
studies have noted the difficulties of deriv-
ing cost-per-job figures and the problems
of comparison between initiatives and
different types of policy . Despite these
difficulties, cost-per-job figures have
started to become available with an in-
creasing regularity . This 'bottom-line'
figure has been calculated for infrastruc-
ture projects (JURUE, 1986a ; PA Cam-
bridge Economic Consultants, 1987), fin-
ancial and non-financial assistance to com-
panies (Segal Quince Wicksteed, 1989 ;
Leslie Hays Consultants Ltd, 1990) and
training and advice projects for individu-
als (Hayton, 1990 ; Turok and Wannop,
1990).
Many of these studies note the difficul-
ties involved in making comparisons be-
tween individual studies . This concern
primarily arises from a lack of comparable
information at projects which have differ-
ent objectives . It has been stated that such
comparisons "can give meaningless re-
sults" (Polytechnic of Central London,
School of Planning, 1990, p . S6). Nonethe-
less, the temptation has proved too great
for some researchers and comparisons
have been made with a wide variety of
different projects (Polytechnic of Central
London, School of Planning, 1990, table
9 .5, p . 64) .
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PAUL FOLEY
Other Problems in Evaluation
The practical, methodological and concep-
tual problems facing those undertaking
evaluation exercises are considerable
(Moore and Townroe, 1990) . Most of the
problems are well documented in Moore
and Townroe (1990, ES 12, p. xi) and the
Polytechnic of Central London, School of
Planning (1990, 9 .2, p . 58). These are
primarily:
(1) unclear or vague objectives for
policy ;
(2) objectives poorly quantified or only
defined in a qualitative manner;
(3) difficulties in determining full exche-
quer or resource-cost implications ;
(4) difficulty of measuring secondary
effects ;
(5) reliance on the accuracy, perception
and honesty of those involved with
an initiative, particularly with re-
spect to sensitive issues .
A major problem, of a more conceptual
nature, concerns the geographical para-
meters which should be used for any
evaluation study. The results of all evalua-
tion studies are determined, at least in
part, by geographical considerations (PA
Cambridge Economic Consultants, 1987) .
The geographical (and accounting) para-
meters chosen for an evaluation have a
considerable influence on additionality,
displacement and multiplier values (these
and other terms are discussed in detail
later in the paper) . A wider geographical
boundary will have a number of effects
over a smaller boundary . These are, pri-
marily, that with a wider boundary more
transfers are likely within the (defined)
local area and therefore additionality will
be lower. Multiplier values are higher with
wider boundaries, but displacement values
are also likely to be higher .
Ultimately, if one adopts national
boundaries, the benefits of a local policy
may be zero or negligible . But as Turok
(1990) points out, the impact (and addi-
tionality) of a project or policy at the local
level may be far more important in over-
 LOCAL ECONOMIC POLICY AND JOB CREATION
coming local disadvantages and spatial
disparities . Therefore, most studies adopt
parameters such as local-authority bound-
aries (Church, 1988), policy zones (PA
Cambridge Economic Consultants, 1987),
or arbitrary distances (20 miles in the
Leslie Hays Consultants Ltd (1990) study) .
A problem with most of these boundaries,
particularly if one is measuring employ-
ment, is that they do not always neatly
conform with local labour-market areas
(Haughton, 1990) . Even where geographi-
cal parameters can be easily drawn, prob-
lems still remain for evaluation studies .
For instance, there is nothing to stop
individual employers from shedding exist-
ing staff in some parts (departments or
sections) of an establishment while in-
creasing employment through implement-
ing an assisted project elsewhere at the
same establishment (Robinson and Wren,
1987) . Such actions are possible, but they
are unlikely to be recorded by most of the
evaluation studies which will be under-
taken .
It is clear from even this short list of
problems that evaluation is not straightfor-
ward . However, many of the common
problems are slowly being overcome as
more studies are completed . Those under-
taking evaluation exercises appear to be
adopting slowly a common framework for
evaluation studies.
Most studies have followed the guide-
lines offered by Robinson and Wren
(1987), who noted the need to narrow
down the complex overlay of policy mea-
sures to manageable proportions, using
data which can be reliably collected, while
at the same time allowing the possibility of
drawing comparisons to give meaning to
figures of cost-effectiveness . Robinson and
Wren (1987) correctly assert that spurious
sophistication should be avoided. Such an
approach should provide the sort of results
policy-makers require without the sophis-
tication which developed in the late 1970s,
when evaluation become too complex and
as result largely unusable. As the final part
of this paper highlights, it is questionable
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567
whether increased sophistication would
really add any value to results obtained for
comparative purposes, since the existing
basis for comparison is probably already
undermined by a number of factors .
PART II . A REVIEW OF EVALUATION
STUDIES
4 . The Evaluation Studies Selected for
Review
The remainder of this chapter will review
nine evaluation reports commissioned by
the Department of the Environment and
the Department of Trade and Industry
between 1983 and 1988 . Several other
studies have been undertaken in the same
time-period, but these studies have tended
to evaluate single initiatives in one locality
(Willis, 1983, 1985 ; PA Cambridge Eco-
nomic Consultants, 1990 ; Sheffield City
Council, 1990) or numerous initiatives in
one locality (Robinson et al., 1987) . These
studies have been omitted from this review
for the reasons outlined below but, where
appropriate, details concerning them have
been included (see Table 1) .
Three other central-government evalua-
tion studies undertaken between 1983 and
1988 have also been excluded from this
review . Two of these were studies of
Regional Policy initiatives (Office and Ser-
vices Industries Schemes 1979-84, Ken-
nett and Bamford (1988) ; Regional Selec-
tive Assistance 1980-84, King (1990) : both
commissioned by the Department of
Trade and Industry) . They relate to an
earlier time-period and suffered problems
of trying to evaluate policies some time
after they ceased . In addition, the evalua-
tion of the Derelict Land Grants Scheme
(Roger Tym and Partners (1987) for the
Department of the Environment Inner
Cities Directorate) has been omitted be-
cause of its predominantly land-use
orientation .
There are several benefits in comparing
the nine evaluation studies commissioned
by the Department of the Environment


568 PAUL FOLEY

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LOCAL ECONOMIC POLICY AND JOB CREATION
and the Department of Trade and Indus-
try . First, since most of the studies are
believed to have been commissioned after
going out to competitive tender, they
should provide results from the most
capable organisation to undertake each
study . Thus the most advanced (in terms of
methodology or capability) or thorough
contractor should be expected to have
undertaken each evaluation study . Sec-
ondly, each of the studies has been under-
taken on a single policy or theme across a
wide geographical area . Thus local varia-
tion or inconsistencies should be over-
come; whilst this is useful for some ele-
ments of an evaluation it is an important
issue and will be examined later . Thirdly,
they present results from a number of
different styles of initiative . The schemes
studied range from infrastructure projects
to assistance for the unemployed and small
businesses (see Table 2). This variety
should provide an insight into how policies
with different emphases can be evaluated .
Finally, the relatively large resources avail-
able (in terms of both data and funding) to
these government departments should al-
low each study to be undertaken as thor-
oughly as resources permitted .
Details regarding the nine evaluation
studies, the organisation which undertook
the work and the year of the study are
shown in Table 1 . In general, most of the
studies were published within two years of
the study being completed ; full details of
the studies can be found in the biblio-
graphy. It can be seen from Table 1 that the
number of evaluation sudies commis-
sioned in recent years has increased con-
siderably, with four being undertaken in
1988 . Whilst the Department of the Envi-
ronment Study, Getting People into Jobs
(Hayton, 1990), is not explicitly an evalua-
tion study it does investigate a number of
areas which are closely associated with
evaluation issues and is therefore included
in this review . It is also included because it
highlights some of the benefits of this
`complementary' series of reports .
Table 2 shows the diversity of projects
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569
covered in the evaluation studies . They
range from large infrastructure projects,
such as Albert Dock (a project costing
£48 .45m with inner-city grants of £35m ;
Polytechnic of Central London, School of
Planning, 1990), to small training projects,
such as an electronic-office course in
Birmingham which received funding of
£ 10 500 per annum (Turok and Wannop,
1990). In total, 307 case-studies or projects
were evaluated and 3825 companies were
contacted. The total value of the policies
evaluated in the nine studies is more than
£500m (see Table 3) .
5. The Evolution of Evaluation
Methodologies : Financial Factors and the
Selected Evaluation Studies
The evolution in evaluation methodologies
can be observed by reference to key vari-
ables or areas of study identified in Turok's
(1990) four different approaches to policy
evaluation. Since all the studies have been
published they conform, at the very least,
with the second type of evaluation study :
"External review : financial efficiency" (the
first type concerns internal reports for
administrative effectiveness) . Turok
(1990) suggests that this approach empha-
sises the value of financial inputs rather
than outputs . Table 3 shows the financial
details which have been recorded in the
reports . With the exception of only two
reports, the economic impact of the Urban
Programme and the Consultancy Initia-
tives, all the evaluation studies have pro-
vided full details regarding the costs of the
initiative and the projects under investiga-
tion . Cameron (1990) and Turok (1990)
both note the current government's desire
to increase the amount of private-sector
investment which public-sector projects
can attract (so increasing the net benefit of
public spending on financial assistance) .
Some earlier studies called this process
`gearing' (HM Treasury, 1988, p . 30 ; Pub-
lic Sector Management Research Unit,
1988, p. 54), but more recently it has
become known as `leverage' . This term


570 PAUL FOLEY

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57 2
perhaps better indicates how difficult it
can be to attract private-sector funding for
some projects . As Table 3 shows most of
the evaluation studies have been able to
calculate leverage ratios . Figures for infra-
structure leverage ratios vary from zero for
some Urban Programme projects to 1 :4.4
for Urban Development Grant schemes
(this figure reduces to 1 :3 .4 if high-addi-
tionality schemes are excluded) . However,
the leverage level achieved at Urban De-
velopment Grant schemes in the UK does
not match the 1 :6 .5 leverage ratio achieved
by the Urban Development Action Grant
in the US (US Department of Housing and
Urban Development, 1988, p . 50) . The
highest level of leverage in the nine studies
was 1 :7 .19 . This ratio was achieved by the
Regional Enterprise Grant, which provides
funding for small businesses to invest in
fixed assets or innovative projects: This
relatively high figure is, in part, produced
because the investment-grant element of
the scheme provides a flat-rate grant con-
tribution of 15 per cent up to a maximum
of £ 15 000 . This automatically provides a
leverage ratio of 1 :5 .7 .
The growing level of interest in cost and
expenditure factors is demonstrated by a
recent increase in the number of studies
investigating `deadweight' spending. Prior
to the completion of three of the studies
undertaken in 1988 and published in 1990,
only one report (Public Sector Manage-
ment Research Unit, 1988) had investi-
gated this issue. `Deadweight' spending has
been defined as the extent to which "pro-
jects would have gone ahead even without
public assistance" (Robinson et al., 1987,
p. 93) . The Robinson et al. (1987) defini-
tion goes on to include projects which
would have gone ahead in a different form
(e .g. scaled down), thus indicating that the
deadweight issue is far from clear . In
reality, many studies have perceived it
more as a continuum with degrees of
additionality (the term additionality is also
used when investigating net job creation in
evaluation studies) . One of the first studies
to investigate deadweight spending was the
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PAUL FOLEY
Urban Development Grant evaluation
study undertaken in 1985/86 . This study
found 10 percent of investment (spending
on projects) had a very high level of
deadweight spending (this was actually
defined as `substitution' in the study ; Pub-
lic Sector Management Research Unit,
1988, p . 46, table 3.1). Other terms used in
the continuum of additionality adopted by
this study were `medium substitution',
`low substitution' and `no substitution' .
Using the broader Robinson et al. (1987)
definition, total Urban Development
Grant deadweight spending would be 44
per cent of investment . This figure is
similar to deadweight spending found for
the US equivalent, the Urban Develop-
ment Action Grant, where 36 per cent of
projects had some form of deadweight
spending (US Department of Housing and
Urban Development, 1982) . Robinson et
al.'s (1987) study found similar relatively
high levels of deadweight spending : 52 .8
per cent for Regional Development Grant-
assisted projects in Newcastle, 23 per cent
for Regional Selective Assistance and Na-
tional Selective Assistance projects, and
57.7 per cent for local authority-assisted
projects . Deadweight spending is investi-
gated further in a separate paper (Foley,
1992) .
The growing level of interest in expendi-
ture issues highlighted by Cameron (1990)
and Turok (1990) is shown by two recent
Department of Trade and Industry studies
evaluating the Regional Enterprise Grant
(Leslie Hays Consultants Ltd, 1990) and
the Consultancy initiative (Segal Quince
Wicksteed, 1989) . These studies have de-
veloped deadweight analysis techniques to
try and investigate the level of grants
necessary for firms to have proceeded with
their project in the same way at the same
time and location .
This recent innovation in the evaluation
of financial costs for initiatives confirms
the increasing interest in expenditure is-
sues highlighted by Cameron (1990) and
Turok (1990) . Whether the techniques,
which rely on the honesty of the inter-

LOCAL ECONOMIC POLICY AND JOB CREATION
viewee, are robust enough to be relied
upon has yet to be established . Nonethe-
less, as the review of financial evaluation
methods discussed in this section has
shown, some conformity in studies is
developing and over time new techniques
are evolving . The evaluation study which
most readily demonstrates these tech-
niques is the evaluation of Regional Enter-
prise Grants (Leslie Hays Consultants Ltd,
1990) .
6. The Evolution of Evaluation
Methodologies : Job Creation and the
Distribution of Employment Opportunities
Turok's (1990) third approach to evalua-
tion-"Social Accounting"-stresses two
main factors . First, an investigation of the
distribution and consequences of policy
impact. Secondly, an examination of the
wider impact of secondary factors arising
from initiatives . Job creation and the
distribution of employment opportunities
will be examined in this section . The next
section will investigate secondary factors,
such as displacement and multiplier
effects.
Hard questions are now being asked
about the practical value of some initia-
tives (Barnekov et al., 1990; Storey, 1990) .
Critics are questioning whether policies
really work as well as supporters claim
(Hudson and Sadler, 1987 ; Moore, 1988 ;
Cameron, 1990) ; and if so how many jobs
are being created? Who gets them? At what
cost? And how many might have been
created without assistance? Commentators
have argued that policy needs to focus
more tightly on those areas and groups
who specifically need to benefit from
assistance .
Evaluation studies have usually found it
is easy to evaluate the total employment
impact of initiatives . Total employment
impact is usually found by comprehensive
surveys of those affected by an initiative
(see Table 2) . Calls for a closer examina-
tion of who actually benefits from initia-
tives (Hayton, 1990 ; Moore and Townroe,
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57 3
1990 ; Turok and Wannop, 1990) are being
accepted and studies are now starting to
investigate this area in greater detail .
The disaggregation of employment im-
pact to investigate policy effects is usually
undertaken in two ways . First, there is a
relatively well-established methodology to
examine the number of jobs which might
have been created without the initiative .
These investigations usually try to find
`additional' employment created by an
initiative. Secondly, investigations of the
type of job or individual who obtains the
jobs created by an initiative are starting to
become more common in evaluation stud-
ies . Employment creation and additional-
ity factors will be examined first before
going on to examine who actually obtains
the jobs.
Employment Creation and Additionality
Table 4 shows the direct job impact of
initiatives . Evaluation studies have usually
found it is easy to evaluate the total gross
direct employment impact of initiatives .
Gross direct impact is best defined as the
total number of jobs created with assis-
tance in the development of a building,
Enterprise Zone, Industrial and Commer-
cial Improvement Area or the total num-
ber of people on a training scheme . Gross
direct jobs are usually found by compre-
hensive surveys of buildings, zones, areas
or training schemes .
It is obviously unrealistic to assert that
every job at an initiative was created due
to policy (Willis, 1985) . Those evaluating
projects are concerned with unravelling the
effects which the initiative has directly on
a company or geographical area . This
effect is usually referred to as 'additional-
ity' . 'Additionality' has been defined by
HM Treasury (1988, p . 26) as "the amount
of output from a policy as compared with
what would have occurred without govern-
ment intervention" . This definition goes
on to note that additionality can apply to
inputs as well as to outputs. `Inputs' in this
context refer to financial additionality . If


5 74 PAUL FOLEY

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LOCAL ECONOMIC POLICY AND JOB CREATION
financial assistance is provided to someone
to do something they would have done
anyway, there is zero additionality (also
called deadweight spending) . Financial ad-
ditionality and deadweight spending issues
were reviewed in the previous section . This
section is concerned with `output' addi-
tionality or the number of jobs created
which can be directly attributed to policy .
Despite claims in some studies (Poly-
technic of Central London, School of Plan-
ning, 1990, p. 12) that there is no generally
agreed operational procedure to assess
additionality, a substantial number of
studies have now been undertaken and a
common format, with clear operating pro-
cedures, is discernible . Storey (1990) notes
that three main approaches have been
used . First, a comparison of the perform-
ance of assisted companies with unassisted
firms . Storey (1990) quotes two examples
of this type of study (Business in the
Community, 1987 ; Martin, 1988) and
largely rejects the approach due to difficul-
ties in obtaining a `control' sample to
provide `matched pairs' of companies with
any degree of legitimacy . Secondly, the use
of regression techniques to isolate the
effects of assistance on financially-assisted
and non-assisted firms (Wren, 1989) . It is
noted that this technique is rarely possible
due to paucity of data .
The final approach identified by Storey
(1990) involves the use of interviews with
firms or individuals receiving assistance .
This form of analysis has been widely used
in nearly all the evaluation studies re-
viewed in this paper . Whilst some com-
mentators have correctly asserted that ad-
ditionality depends in part upon the sub-
jective viewpoint (and honesty) of a re-
spondent (Leslie Hays Consultants Ltd,
1990), efforts have been made in evalua-
tion studies to integrate the interviewer's
judgement of additionality to temper unre-
alistic views (JURUE, 1986b, p . 36 ; Leslie
Hays Consultants Ltd, 1990, p . 13) . Like
many other aspects of evaluation, addi-
tionality is a far from clear-cut issue . Once
again, the geographical parameters
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575
adopted by a study have a considerable
influence on the level of additionality
(Storey, 1990) .
The Public Sector Management Re-
search Unit (1988, pp . 57-62) review of
the impact of the Urban Development
Grant offers detailed information about a
pecise methodology to determine which
jobs at a project can be defined as addi-
tional . Their technique involves first estab-
lishing whether financial additionality has
occurred for the developer, before consi-
dering whether the occupiers of Urban
Development Grant premises really
needed to occupy them (i.e . could alterna-
tive premises have been found?) . Finally, it
considers whether new or existing jobs
would have been lost without Urban De-
velopment Grant assistance . A similar
approach has been used in several other
studies (JURUE, 1986a-Industrial Im-
provement Areas ; PA Cambridge Eco-
nomic Consultants, 1987-Enterprise
Zones; Leslie Hays Consultants Ltd,
1990-Regional Enterprise Grant) .
The methodology for defining net addi-
tional jobs has been presented most simply
in the Leslie Hays Consultants Ltd (1990,
pp. 13-14) study of Regional Enterprise
Grants . They excluded all companies from
employment-creation calculations which
did not have financial additionality, and
then examined the remaining 27 projects
to investigate the proportion of jobs
created or safeguarded which were wholly
additional. In this study, all jobs were
newly-created or safeguarded full-time
jobs ; there was no requirement to adopt a
weighting system to calculate full-time job
equivalents (often referred to as FTEs) .
Some studies have adopted FTEs as a
method of standardisation . The Urban
Programme study (JURUE, 1986b) gave a
weighting of 0 .5 to each part-time job ;
curiously, temporary jobs were regarded as
full-time jobs and given a weight of 1 . The
tourism study (Polytechnic of Central Lon-
don, School of Planning, 1990) also faced
problems regarding temporary jobs due to
the seasonal nature of employment in the

576
industry . They adopted the same weight
for part-time jobs as the Urban Pro-
gramme study (0 .5), but in addition gave
each full-time seasonal job a weight of 0 .3
and each part-time seasonal job a weight of
0.1 (despite the fact that logic should
dictate it ought to be 0 .15 .3)).5x0
(0
. ciaries of policy is made by Moore and
Whilst such a distinction may be regarded
as wholly arbitrary it is important, at the
very least, to distinguish between part-time
and full-time job opportunities .
The Distribution of Employment
It was noted above that there has been
conflicting evidence about whether the
most disadvantaged really benefit from
economic initiatives (Barnekov et al.,
1990; Moore and Townroe, 1990) . Depri-
vation measures such as unemployment
and poor housing have been important
indicators guiding Urban Programme, En-
terprise Zones and Inner City Task Forces
(Moore and Townroe, 1990) . But doubts
remain about the distribution of the be-
nefits of these policies in the targeted
geographical area to groups or individuals
who are less disadvantaged than the tar-
geted population or the intended benefici-
aries of the assistance . Targeting by geo-
graphical area (demonstrated by the three
examples above) is simpler, less sensitive
and less controversial than targeting on
selected groups (Hood, 1976 ; Turok and
Wannop, 1990) . The issue of targeting is
obviously controversial since it involves
making priorities about the distribution of
resources . Some commentators (Morison,
1987) have noted that it is this lack of
clarity in making clear objectives for policy
which creates difficulties for those manag-
ing initiatives (as well as those evaluating
them) .
Turok and Wannop (1990) note that
targeted policies usually take one of two
approaches : first, initiatives which create
jobs suitable for disadvantaged groups ;
secondly, initiatives which create as many
jobs as possible, of any character, so that
the unemployed or disadvantaged groups
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PAUL FOLEY
may be able to compete for them . Turok
and Wannop (1990) go on to assert that
little comparative research has been under-
taken to investigate the different effects of
these two approaches . A similar request for
more studies on the incidence and benefi-
Townroe (1990) .
Table 4 outlines the employment distri-
bution analysis which has been undertaken
in the nine evaluation studies. The reports
on targeted initiatives (Turok and Wan-
nop, 1990) and `getting people into jobs'
(Hayton, 1990) should provide more de-
tails about distribution since they both
focus on training schemes, often targeted
at specific disadvantaged groups, rather
than more general initiatives . The two
studies provide details of the main target
groups for their projects (Hayton, 1990,
table 1, p . 3 ; Turok and Wannop, 1990,
table 4 .1, p . 15) . There is agreement be-
tween the two studies on many character-
istics (gender, unemployment, ethnic mi-
norities, young people), but differences
also occur. The Turok and Wannop (1990)
study includes details such as place of
residence, and whether the individual has
any qualifications . The Hayton (1990)
study includes characteristics such as dis-
abilities and whether individuals are ex-
offenders . Results for both of these studies
are provided in Table 4 as a range of
results rather than a single figure since both
provided details of a diverse selection of
initiatives. Indeed, it is interesting that
Turok and Wannop (1990, p . 38) found
that variation within each category of
initiative was often greater than between
categories .
Table 4 shows that few studies have
evaluated all of these characteristics . Even,
when some of the details are provided they
are presented without reference to local
conditions so that the significance of re-
sults cannot be easily evaluated . Two
studies, Industrial and Commercial Im-
provement Areas (JURUE, 1986a) and the
Consultancy Initiative (Segal Quince
Wicksteed, 1989), have failed to consider


LOCAL ECONOMIC POLICY AND JOB CREATION 57 7

any of these factors . The remainder of the (1987) study shows the difficulties which
studies have usually evaluated three or can exist even with relatively simple issues
more of the characteristics . in evaluation studies. It must also be
The proportion of jobs at an initiative remembered that simple comparison be-
which are full-time has been calculated by tween studies can produce largely spurious
five of the evaluation studies . The lowest results since the level of local recruitment
figures (56 per cent) were recorded in the will be affected considerably by the pre-
tourism study (Polytechnic of Central Lon- vailing unemployment rate and other fac-
don, School of Planning, 1990), which tors in an area at a particular time . For
investigated schemes with a predomi- instance, during times of low unem-
nantly retail and/or seasonal emphasis . ployment companies may have to direct
Four of the studies have examined the their recruitment activities to attracting
proportion of male (or female) employ- employees who are already in employment
ment at schemes . A relatively small range since relatively few unemployed may be
for these results exists, 25 per cent (mini- available . The converse is likely to occur
mum 49 per cent male employment at during periods of high unemployment.
tourism schemes, maximum 74 per cent at Many previous studies have highlighted
one of the targeted employment schemes), the place of residence of the individual (as
despite the different character and empha- a surrogate for disadvantage) rather than
sis of the schemes studied. any personal characteristics or measures of
An issue which is becoming important in disadvantage. The primary concern of
policy reviews is the extent to which these studies has been to find how many
projects actualy help unemployed people inner-city residents have obtained employ-
to find a job (Moore and Townroe, 1990) . ment at projects . Studies, such as those by
The Urban Development Grant (Public Begg et al . (1986), Buck and Gordon
Sector Management Research Unit, 1988) (1987), Cheshire (1979), Evans and
and tourism studies (Polytechnic of Cen- Richardson (1981) and McArthur and
tral London, School of Planning, 1990) McGregor (1987), have found that the
found that only 18 and 24 per cent respec- benefits of local initiatives are unlikely to
tively of jobs were obtained by people who be confined to the local area due to
were previously unemployed . These figures commuters from outside the inner areas
are similar to the 25 per cent figure obtaining jobs .
obtained in a survey of employees re- Table 4 shows the diversity of results
cruited from the unemployment pool in obtained from the evaluation studies
Tyneside (quoted in Willis, 1983) . How- which have investigated the proportion of
ever, two other studies have obtained jobs taken by inner-area residents . Results
higher results : the Regional Enterprise range from 46 per cent for tourism projects
Grant study obtained a figure of 66 per (Polytechnic of Central London, School of
cent recruitment of the unemployed (Leslie Planning, 1990) to 95 per cent (from
Hays Consultants Ltd, 1990 ; see Table 4) development areas) for Regional Enter-
and in a study undertaken by Robinson et prise Grants (Leslie Hays Consultants Ltd,
al. (1987) managers said that 71 per cent of 1990) . Once again, difficulties in providing
new jobs were filled by those previously comparisons exist because of the different
out of work (a discrepancy arose between definitions used by studies to define the
this figure and a figure of 41 per cent `inner area' . Another evaluation study,
obtained during a survey of employees ; the undertaken by Robinson et al. (1987)
study therefore suggested it was reasonable found lower figures. Only 37 per cent of
to estimate a figure between 50 and 60 per employees recruited actually lived in the
cent) . inner areas . These results, and their
The discrepancy in the Robinson et al . diversity, are not entirely surprising since
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578
the level of employment of inner-city
residents will be affected by a wide range of
local characteristics which will change over
time . For instance, a study by Begg et al.
(1986) found that the position of inner-city
residents has been deteriorating . In 1961,
25 per cent of all inner-city jobs were taken
by inward commuters; by 1981 the propor-
tion had risen to 39 per cent .
Perhaps one of the best ways to try and
evaluate the opportunity for a disadvan-
taged local resident to obtain employment
is to investigate the type of employment
offered by projects . There are strong and
highly laudable arguments in favour of
providing good quality jobs to all the
unemployed but precise definitions, or
methods of measuring quality, have yet to
be developed . Therefore, most studies
have simply tried to examine the propor-
tion of jobs which could be undertaken by
low skilled or unskilled workers . Once
again, differences in classifying jobs be-
tween studies are prevalent, but some
comparisons can be drawn . The highest
proportion of jobs which might be eligible
to disadvantaged groups was found by the
Urban Programme (JURUE, 1986b) and
tourism (Polytechnic of Central London,
School of Planning, 1990) studies . Each
used measures of the amount of training
required to undertake the job . The Urban
Programme (JURUE, 1986b) study found
that 61 per cent of jobs only required on-
the-job training ; the tourism study (Poly-
technic of Central London, School of Plan-
ning, 1990) found that 70 per cent of jobs
required no training . Arguments in favour
of jobs possessing a training element to
enhance the skills and employability of
workers obviously exist and this is high-
lighted as one of the further benefits
derived from the Regional Enterprise
Grant evaluation (Leslie Hays Consultants
Ltd, 1990) .
As Table 4 shows, other evaluation
studies have obtained lower results . Be-
tween 25 and 53 per cent of employment
opportunities were for unskilled workers
or those lacking qualifications . The Robin-
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PAUL FOLEY
son et al. (1987) study found even lower
figures, with only 17 per cent of new jobs
for the unskilled .
A final, but important characteristic
which has been analysed in three of the
evaluation studies is the proportion of jobs
which have been taken by people from
ethnic-minority groups . One reason for the
importance of this result is that some
studies have shown that poor employer
perceptions of the unemployed or those
from ethnic-minority groups can act as
barrier to employment (Metcalf, 1975 ;
Evans and Richardson, 1981 ; Department
of Employment, 1988 ; Meadows et al.,
1988) . It is perhaps because of this that
Robinson et al. (1987) state that "provid-
ing financial assistance to inner area estab-
lishments . . . without seeking to influence
recruitment patterns is not likely to im-
prove upon established labour market pat-
terns in distributing the newly created
jobs" (Robinson et al., 1987, p . 111) . Once
again, it must be emphasised that the
significance of these figures can only be
assessed if the overall proportion of people
(or the unemployed) from ethnic-minority
groups is known . Regrettably, none of the
studies provides this information .
7. The Evolution of Evaluation
Methodologies : Secondary Factors
The second element important in Turok's
(1990) third approach to evaluation, 'so-
cial accounting', is an investigation of the
wider impact of secondary factors arising
from an initiative. Table 5 shows the
secondary factors which have been re-
corded in the evaluation studies . In gen-
eral, studies have either analysed all three
aspects of secondary activity (displace-
ment, supplier multipliers and multiplier
effects) or they have not analysed any of
these factors .
The first report explicitly to investigate
secondary factors was the PA Cambridge
Economic Consultants (1987) investiga-
tion of Enterprise Zones undertaken in
1986/87 . Earlier studies considered these


LOCAL ECONOMIC POLICY AND JOB CREATION 579

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580
issues, but none explicitly calculated their
employment impact . Since that date, the
majority of studies have included analysis
or questions relating to these issues in
questionnaires distributed to companies
during surveys. A good example of the
form of these questions is provided in the
Consultancy Initiatives study (Segal
Quince Wicksteed, 1989, pp. 109-110) .
Regrettably, this study did not present the
results of this analysis in the final report .
Two other studies which did not include a
consideration of secondary factors were
first, the Hayton (1990) report which was
primarily concerned with good practice
and could not therefore realistically be
expected to include these issues ; and,
secondly, the Targeted Initiatives study
(Turok and Wannop, 1990) which noted
the difficulties of such exercises, particu-
larly in relation to tracing secondary
effects for individuals (rather than com-
panies) . The report then goes on to state
that "in line with most other local evalua-
tion studies the multiplier effects were
therefore ignored" (Turok and Wannop,
1990, p . 65) . Whilst this might have been
the case when their study was undertaken
in 1988 (at that time only the Enterprise
Zone report included these considera-
tions), the position has changed recently,
with most studies now considering secon-
dary impacts .
Displacement Effects
The best definition of displacement is
provided by Turok and Wannop (1990) .
They note that "displacement is very vis-
ible when firms relocate, but it arises more
commonly when increased sales, output
and employment in assisted firms are
achieved at the direct expense of sales,
output and employment in their unassisted
competitors" (Turok and Wannop, 1990,
p. 64) . The Polytechnic of Central London
study (1990) includes one further element
of displacement : they note that a project
may directly displace an activity that was
previously occurring on its site .
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PAUL FOLEY
Displacement is usually found by asking
companies how much business they are
likely to have taken from competitors .
Further questions about the location of
competitors define the proportion of sales
which are lost from competitors located
within the `local' study area adopted for
the evaluation . Such an approach has a
number of inherent difficulties . It relies on
the knowledge of companies about their
competitors and generally assumes a fall in
competitors' output will be matched by an
equal proportionate fall in competitors'
employment levels. The Regional Enter-
prise Grant evaluation (Leslie Hays Con-
sultants Ltd, 1990, p . 49) tried partially to
overcome this by asking if the sales loss
will be significant enough to put competi-
tors out of business . But, once again, any
answer to this question requires a good
knowledge by the respondent about the
operating capabilities and personnel
requirements of competitors .
The most common way to present dis-
placement values is to consider the propor-
tion of local trade lost (displaced) by
competitors as a result of the activities of
the assisted firm . The Enterprise Zone
study (PA Cambridge Economic Consul-
tants 1987) found 23 .7 per cent local
displacement. The Robinson et al. study
(1987) found 27 per cent local displace-
ment with little difference between the
types of initiative evaluated . An evalua-
tion of the Enterprise Allowance Scheme
(Department of Employment, 1986) as-
sumed a displacement effect of 50 per cent.
This was later refuted by Elias and Whitfi-
eld (1987) who found that less than 15 per
cent of Enterprise Allowance Scheme com-
panies felt they took more than 50 per cent
of employment from competitors . The
study of tourism projects (Polytechnic of
Central London, School of Planning, 1990)
states that the 20 tourism projects studied
"fall firmly within the lower end of the
range of displacement" (Polytechnic of
Central London, School of Planning, 1990,
p. 63) . This assertion is not quantified and
displacement effects are not subsequently

LOCAL ECONOMIC POLICY AND JOB CREATION
considered on the grounds that "the mar-
ket for the services they provide is grow-
ing" (Polytechnic of Central London,
School of Planning, 1990, p . 13) . Doubts
must exist about the fact that the Albert
Dock development, costing more than
£48m, and other tourism schemes can
have no displacement impact .
Turok (1990) notes that displacement is
likely to be greatest for companies operat-
ing in saturated markets and the effects can
vary over time. Linkage studies, which
occupied a central position in industrial-
location research in the early 1970s (Mar-
shall, 1987), may be pertinent for evalua-
tion studies investigating displacement
since they highlight many additional fac-
tors affecting linkage patterns beyond
those identified by Turok (1990) . Other
factors identified by these studies include
company size (Mosley and Townroe, 1973 ;
Lever, 1974), product type or service
(Keeble, 1969), ownership (Hoare, 1978),
management type (Taylor and Wood,
1973), plant status (Watts, 1981), produc-
tivity (Britton, 1976) and internal organi-
sation (Hoare, 1978) . Whilst the variety of
factors affecting local linkages is consider-
able, figures derived for the proportion of
output from companies to local areas were
often similar (Steed, 1968-44 per cent ;
Brooks and Gilmour, 1973-34 per cent ;
McDermott, 1976-43 per cent ; Razin,
1988-21 per cent) . Whilst these local
output figures cannot be directly compared
to the displacement figures derived for the
Enterprise Zone and Regional Enterprise
Grant studies, they do offer support for
figures derived from these studies . Equally,
the literature highlights the local factors
which may be significant in affecting levels
of local displacement.
When the level of local displacement has
been derived, it is transformed mathemati-
cally (PA Cambridge Economic Consul-
tants, 1987, p . 49 ; Leslie Hays Consultants
Ltd, 1990, p . 34) to provide a displacement
factor . This factor is one of the elements
which is then applied to the figure derived
for gross additional jobs in order to calcu-
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58 1
late the number of net additional jobs
created by an initiative. To standardise the
presentation of displacement results, Table
5 provides details of the proportion of
gross additional jobs lost by displacement .
Supplier Multiplier
Most of the recent studies undertaking
secondary-impact analysis have identified
two types of multiplier : supplier multiplier
effects, produced by an increase in local
purchases stimulated by assistance, and
multiplier effects caused by additional
spending from workers or visitors to an
assisted company or development . Sup-
plier multipliers will be examined in this
section; other multiplier effects will be
investigated in the next section .
Supplier multipliers are used in evalua-
tion studies to investigate the job-creation
impact of additional purchases by com-
panies from other local companies . The
impact of supplier multipliers is found by
asking companies what changes in their
purchasing activity (of goods and services)
might arise from the assistance provided to
the company. The increase or decrease in
local (as defined by the parameters
adopted for the study) supplies is then
combined with other factors such as the
total value of all purchases, project turn-
over and project value-added to find the
supplier multiplier. An example of this
methodology is provided by the Leslie
Hays Consultants Ltd Study (1990, p . 36) .
The fact that this is an addendum perhaps
reflects the difficulties in clearly develop-
ing a methodology for estimating supplier
multipliers. Other studies (PA Cambridge
Economic Consultants, 1987) have pro-
vided refinements to the basic methodo-
logy by considering the different local
labour impact of goods or services bought
from local producers (e.g. manufacturers)
and local suppliers (e .g. retailers and
wholesalers) . Using previous research (in-
put-output tables) the PA Cambridge Eco-
nomic Consultants study (1987) has shown
that the local labour content of purchases

582
from local producers is higher (50 per cent
of the value of the purchase) than pur-
chases from local suppliers (20 per cent of
the value of purchases) .
The impact of supplier effects is pre-
sented in different ways by each of the
evaluation studies . The Urban Programme
evaluation (JURUE, 1986b, pp . 31, 32)
provides ordinal data on different types of
goods and services (materials, compo-
nents, stationery/sundry items) purchased
from local suppliers . However, the em-
ployment impact of these purchases is not
estimated . The Enterprise Zone study (PA
Cambridge Economic Consultants, 1987,
p. 50) estimates that 20 per cent of pur-
chases are from the local area . The Re-
gional Enterprise Grant report (Leslie
Hays Consultants Ltd, 1990, pp . 18,
79-80) estimates that assistance will in-
crease overall purchases by £ 1 .9m and
local purchases by £300000 . The tourism
study (Polytechnic of Central London,
School of Planning, 1990) examined the
level of local spending by visitors to two
case-studies (Albert Dock complex and the
Hull Marina Post House Hotel) and the
level of purchases from local businesses to
investigate the local impact of the schemes .
The results of the tourism study were
entered into a complex, but commonly-
used (Archer, 1973 ; Henderson and Cous-
ins, 1975; Vaughan, 1977) mathematical
model (see pp . 79-80) and the number of
local additional jobs was provided : 10 full-
time (equivalent) jobs at the Albert Dock
complex and four full-time (equivalent)
jobs at the Marina Hotel .
It will be noted that the four different
studies which have undertaken supplier
multiplier analysis have presented their
results in four different ways. However,
comparisons can be made if the results are
presented as their impact on additional
jobs (see Table 5). Thus the supplier
multiplier (the value by which additional
jobs are multiplied to find the net number
of jobs created by an increased level of
local purchases) for Regional Enterprise
Grants (Leslie Hays Consultants Ltd,
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PAUL FOLEY
1990) is 0 .11 . The lowest value was ob-
tained by the Enterprise Zone study (PA
Cambridge Economic Consultants, 1987)
which had a supplier multiplier of 0 .048 .
The relatively high (particularly in relation
to the Enterprise Zone result) figure for the
Regional Enterprise Grant may be due to
the fact that companies must have fewer
than 25 employees to be eligible for grants .
Smaller companies are likely to possess
low levels of external control and higher
degrees of local purchasing (Watts, 1981) .
Fifty-two per cent of companies at Enter-
prise Zones were found to be transfers or
new branches (PA Cambridge Economic
Consultants, 1987, p . 27) ; these companies
therefore had a higher likelihood of being
externally controlled and making fewer
local purchases . Once again the linkage
literature of the 1970s provides a valuable
insight into the local characteristics which
are most likely to influence local purchas-
ing behaviour.
Income and Employment Multiplier
Brownrigg (1974, p . 56) stated that "the
basic theory of the income multiplier is
simple enough ; a money injection into an
economic system, whether national or re-
gional, will cause an increase in the level of
income in that system by some multiplier
of the original injection" . Turok (1990,
p. 9) has provided a more practical context
for these effects noting that "the `induced'
effect of increased incomes and expendi-
tures by an enlarged workforce and from
any construction activity" will produce
positive multiplier effects.
Any money spent in an economy (or
area) will generate additional income in
that area. A portion of this additional
income will be spent again in that area in a
second round of spending . This process is
continuous, with many later rounds of
spending. It only ceases to have an impact
when all subsequent income has leaked out
of the economy, through spending in other
areas . One of the main influences on the
size of a multiplier is the level or propor-
 LOCAL ECONOMIC POLICY AND JOB CREATION
tion of the subsequent income flows (in
later rounds) which leak out of the eco-
nomy after each round of expenditure .
Multiplier effects are usually calculated
using input-output matrices (Willis,
1983) . The concept of input-output
models has a long history (Trigg and
Madden, 1990) dating back to Leontief
(1936) . Despite decades of research and
modifications to models and theory, multi-
plier calculations are still plagued with
methodological difficulties (Hubbard,
1982 ; Nairn and Swales, 1987 ; Williams,
1989) . Difficulties in estimating multiplier
values are caused by the need to possess
accurate details about social character-
istics, consumption patterns and the indus-
trial structure of an area . The relationship
between employment and output in each
industry is usually assumed to remain
stable (Willis, 1983). In the short-term this
is acceptable, but over longer time-periods
the relationship will change .
In the context of local economic policy,
particularly in relation to construction
projects (such as advance factory units or
Enterprise Zone developments), there is
often substantial direct leakage from the
initial injection of funds as architectural
design work, and prefabrication or con-
struction work, is undertaken outside the
area or by individuals resident outside the
area (Wilson, 1968 ; Glasson et al., 1988).
The geographical parameters adopted as
boundaries for the policy impact by an
evaluation study also have an impact on
multiplier values. Multiplier effects usually
become more significant as the size of an
area increases (Turok, 1990) .
Despite these methodological problems,
the magnitude of secondary multiplier
effects can be significant . Studies at the
regional level (Archibald, 1967 ; Steele,
1969 ; Foley, 1991) have found multiplier
values of between 1 .19 and 1 .7 . At a more
local scale, similar to the parameters
adopted by most evaluation studies, stud-
ies have generally found a smaller range of
multiplier values. Greig's (1971) study of a
Fort William paper mill adopted values of
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583
1 .44-1 .54 . Brownrigg's (1974) study of the
University of Stirling adopted values of
1 .24-1 .54 . Lower values were adopted in a
study by McGuire (1983) of Dounreay and
Torness nuclear power stations : 1 .25-1 .40 .
A study of the impact of the GEAR project
in Glasgow (Nairn and Swales, 1987) has
provided the lowest local multiplier value :
1 .12 .
Turok and Wannop's (1990, p . 65) asser-
tion that "in general most local multiplier
effects are very small" has some justifica-
tion . But to use this as reason to dismiss
consideration of multiplier effects in an
evaluation study is a little harsh, particu-
larly since, as noted above, multiplier
effects may be responsible for between 12
and 54 per cent of jobs created by an
initiative .
Three of the evaluation studies reviewed
in this study calculated multiplier values .
All three arrived at exactly the same figure,
1 .1 . The Enterprise Zone study (PA Cam-
bridge Economic Consultants, 1987) calcu-
lated a longer-term multiplier to try and
estimate the longer-term impact of the 10-
year experiment . The Regional Enterprise
Grant evaluation (Leslie Hays Consultants
Ltd, 1990, p. 35) also calculated a longer-
term multiplier and regional multiplier
values. They estimated the short-term re-
gional multiplier for the impact of the
Regional Enterprise Grant to be 1 .2 ; the
longer-term regional value was 1 .7 .
The tourism study (Polytechnic of Cen-
tral London, School of Planning, 1990)
was faced with an added problem since
multiplier impacts were not simply con-
fined to a once-only cash injection into
their projects . By their nature, tourism
projects continue to attract tourists and
revenue into a local economy over time .
They used complex models of income
generation and employment creation (see
pp. 78-80) to calculate multiplier effects .
Calculations probably reached an unneces-
sary level of sophistication by calculating
multiplier values per £ 100 000 of visitor-
spending and values per 100 000 visitors
(see pp . 23-24) .

584
Secondary Effects : An Overview
This section has shown that many studies
are now starting to investigate the effects
necessary, to fulfil Turok's (1990) third
approach to evaluation, `social account-
ing' . It is clear that common methodolo-
gies to calculate secondary effects are now
emerging. This section has also revealed
some of the complex calculations which
are used to estimate secondary effects
during evaluation studies . Much of this
analysis is highly complex and almost
certainly strays towards the unnecessary
level of spurious sophistication which
some commentators have argued should
be avoided (Walsh and Williams, 1969 ;
Robinson et al., 1987) . It is interesting that
in some studies, displacement effects and
supplier effects come close to cancelling
each other out . In addition, multiplier
effects are similar for the three evaluation
studies which undertook this aspect of
analysis-but this should simply be due to
chance .
A question that must therefore be ad-
dressed is whether all the time and trouble
taken to calculate secondary effects is
really worthwhile, particularly when no
information on the characteristics of those
who obtained the jobs created by secon-
dary effects is provided . In most evalua-
tion studies, the measurement of direct
impacts and the types of jobs created
involves interviews with companies . Dur-
ing these interviews it is relatively easy to
ask additional questions relating to sup-
plier and displacement effects . Methodolo-
gies to calculate supplier and displacement
effects have now been developed and
calculating these impacts in future studies
should therefore be relatively easy . In a
similar way, methodologies to calculate
multiplier effects are relatively well-estab-
lished and the level of additional work
required to estimate multiplier effects in
future studies should be reduced. Whilst
advances in methodologies and theory will
almost certainly cause some of these ele-
ments to alter in future, it should remain
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PAUL FOLEY
relatively easy to calculate them . There-
fore, on balance, as long as it does not
substantially prevent more detailed analy-
sis of how policies operate or who actually
obtains the jobs, secondary effects should
be investigated since they provide a more
accurate picture of the overall impact of
policy .
8 . The Evolution of Evaluation
Methodologies : Providing an Overview of
Economic Impact
The preceding review has outlined the
primary methods of analysis used by the
nine evaluation studies to investigate the
employment impact of the initiatives.
When the individual elements of the analy-
sis are completed, results are usually drawn
together to provide an overall estimate of
the employment impact of the initiative . A
common format for this analysis has
started to emerge . It usually includes the
elements shown below (the best-presented
examples can be found in PA Cambridge
Economic Consultants, 1987, p . 52 ; Leslie
Hays Consultants Ltd, 1990, p. 20) .
Costs
(1) Gross Exchequer cost (=g) .
(2) Exchequer funding to deadweight
or non-financially additional pro-
jects (=n).
(3) Exchequer expenditure on addi-
tional projects (g - n=e) .
Employment
(4) Gross project jobs (=p) .
(5) Gross additional project jobs
(p-all non-additional jobs= a).
(6) Displacement effects (displacement
factor= d) .
Supplier effects (supplier factor
=s) .
Local income multiplier (multiplier
factor= m) .
Total net jobs =t .

LOCAL ECONOMIC POLICY AND JOB CREATION
(10) Exchequer cost per job (g/t=J) .
The various secondary effects are usually
incorporated into calculations in a
stepwise manner to provide an overall
estimate of the total net jobs (t) created.
First of all, exchequer costs (g, n and e) and
the number of gross additional jobs (p) are
estimated . Next the displacement effect on
additional jobs is calculated-see equation
(1) .
a(l-d)
This figure is then carried forward and the
effct of the supplier multiplier is calculated
and incorporated into the equation-see
equation (2) .
a(l -d)(l +s)
This result is then carried forward and the
effect of the income multiplier is calcu-
lated and incorporated into the equa-
tion-see equation (3).
Total net jobs =a(1-d)(l+s)(l+m) (3)
Exchequer costs per job are then calculated
using equation (4).
Exchequer cost per job=
g/a(1-d)(1 +s)(l + m)
For reasons which have never been clearly
stated in any of the studies, displacement
effects are entered into the `equation'
before the supplier and income multiplier
effects . When studies are undertaken retro-
spectively, some years after the policy is
implemented, this is acceptable . But since
there is probably a lag in the displacement
effect, studies such as the Regional Em-
ployment Grant (Leslie Hays Consultants
Ltd, 1990) undertaking an investigation at
an early point in an initiative's life may be
better served by estimating the effect of the
different factors simultaneously (or pos-
sibly including a time-lag for the displace-
ment value, since companies may not close
or lose workers immediately) . This can be
represented by equation (5):
J=gla-(ad)+(as)+(am)
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58 5
The outcome of the two equations will be
broadly similar (results differ by only 0 .99
per cent if variables are the same for both
equations) . Nonetheless, the above method
-equation (4)-or variations of it, appear
to have been adopted by most of the recent
evaluation studies.
This review has highlighted some of
the different methods used in evaluation
studies to determine the various elements
which are used to calculate net additional
(1) jobs or costs per job . Differences between
the approaches undertaken by studies,
and the results derived by them, exist .
Some of these ambiguities (and methods
to try and `standardise' them) are
described in Table 6 . Several studies have
(2) noted that methodological differences
make comparison between studies diffi-
cult (Polytechnic of Central London,
School of Planning, 1990; Turok and
Wannop, 1990) . Some of these differ-
ences will be briefly highlighted before
considering additional problems which
have arisen with some studies to make
comparison between studies even more
untenable.
The footnotes to Table 6 outline some
of the major differences which exist be-
(4) tween studies . Some of the studies have
included secondary factors; others have
not . The Enterprise Zone study (PA
Cambridge Economic Consultants, 1987)
included a long-term multiplier (as well
as a short-term multiplier) to account for
the impact of the zone over a longer time
period (to assist comparison this element
was excluded from Table 6) .
Most of the studies standardised the
employment impact of initiatives into full-
time equivalents (FTEs) . However, many
of the studies omitted to include the
construction jobs created in the develop-
ment of buildings at an initiative . This
effect can be substantial, 2478 person-
years at Urban Development Grant pro-
jects (Public Sector Management Research
Unit, 1988). Studies tackled this problem
in different ways . The tourism study (Poly-
(5) technic of Central London, School of


58 6 PAUL FOLEY

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 LOCAL ECONOMIC POLICY AND JOB CREATION
Planning, 1990) did not calculate the im-
pact . The Urban Development Grant
study (Public Sector Management Re-
search Unit, 1988) included them sepa-
rately from other calculations and the
Enterprise Zone study included them as an
integral part of all calculations (since other
studies omitted or separated them they
have been excluded from the Enterprise
Zone results in Table 6).
At a number of the projects, public-
sector assistance has been boosted by an
input of private-sector funds ; Table 3
showed the leverage ratios obtained by
initiatives . In general, studies have then
assumed that all (additional) employ-
ment created at the project has been a
result of public-sector funding . This has
been further examined by investigating the
financial additionality of public-sector
funding . This approach is valid where
funding from both groups is similar, but as
the level of private-sector funding in-
creases the legitimacy of stating that all
(additional) jobs are created by a small
level of public-sector funding becomes
questionable . For instance, the tourism
study (Polytechnic of Central London,
School of Planning, 1990, p . 11) includes
one project with a total value of £915 000
which received a grant of £35 000 . Whilst a
leverage ratio of 1 :26 .1 is commendable,
doubt must exist about whether all the jobs
can legitimately be considered to have
resulted from public-sector assistance,
even if they do all conform to the usually
adopted definition of `additional employ-
ment' (the cost per job at this project is
E1400 per FTE) . Indeed, there could be a
temptation for initiatives to provide a
small amount of assistance to large
schemes so that figures for the cost-effec-
tiveness in producing jobs would be
favourable . Such a course of action is
obviously nonsensical, especially since two
of the studies (Segal Quince Wicksteed,
1989 ; Leslie Hays Consultants Ltd, 1990)
found the additionality of employment
created at a project rose with the size of the
grant provided .
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587
9 . Costs per Job Found by Evaluation
Studies
The focus for this paper, like the evalua-
tion studies reviewed, is employment cre-
ation. The Enterprise Zone study (PA
Cambridge Economic Consultants, 1987,
p. 40), like many others, notes that "em-
ployment is one important yardstick for
evaluation . . . it can be measured in real
time at several points in time on a consis-
tent basis by most firms and institutions" .
Nearly all the studies note that other
objectives and benefits, such as environ-
mental improvements, can be adopted (see
Polytechnic Central London, School of
Planning, 1990, table 8 .2, p . 51 for an
indication of the diversity) . Methods of
quantifying some of these are being devel-
oped (Johansson, 1987 ; Smith, 1989 ; PA
Cambridge Economic Consultants, 1990) .
Other elements, such as image, are proving
rather more difficult to quantify, but since
inward investors appear to be unaffected
by image (Polytechnic of Central London,
School of Planning, 1990, p . 41) this
perceived longer-term benefit may not be
as significant as first thought .
As well as noting other benefits of pro-
jects, several studies also note the addi-
tional costs which many studies fail to
consider . Turok (1990) and others (Blake,
1973 ; Hodge and Whitby, 1979; Pearce,
1983) have stated that full exchequer costs
should be considered, not just the immedi-
ate costs incurred by the project-since the
immediate costs used in calculations usu-
ally only include the costs of funding
provided by an initiative, even they are
inaccurate, they fail to consider the person-
nel and management costs involved in
administering an initiative. Other, highly
pertinent issues concerning costs have also
been raised. Turok (1990) notes that un-
employment imposes immeasurable social
and psychological hardships on house-
holds, beyond the cost to the economy, and
Storey (1990) states that policy-makers
should be concerned with the marginal
cost per job of an initiative not the

588
simple average-cost-per-job figure usually
provided .
Despite all these considerations and
difficulties it has been noted that public-
sector bodies are increasingly being treated
like commercial enterprises (Turok, 1990) .
Economy in the use of public resources
and efficiency in the provision of public
resources are crucial . As a result, financial
considerations regarding the cost-effective-
ness of initiatives have become important
and costs per job have been calculated by
all but one of the nine evaluation studies
(see Table 6) . Criticism of this approach
has been voiced by many groups . For
instance the GLC (1985 ; quoted in Jeffer-
ies and Robinson, 1987, p . 63) stated the
need for jobs meeting social needs, "not
the priorities of the balance sheet" .
Quite correctly, wherever cost-per-job
figures have been provided they have
generally been accompanied by warnings
that comparison of results can be mislead-
ing (Polytechnic of Central London,
School of Planning, 1990 ; Foley, 1991) .
Turok and Wannop (1990, p . 2) note that
comparisons between different projects
"solely on the basis of cost per job created
can be misleading, because they overlook
additional economic and social benefits,
including the re-allocation of jobs to disad-
vantaged groups, jobs created temporarily
and the kinds of jobs created" . JURUE
(1986a, p . 36) note similar reasons for
caution and suggest that some comparison
can be made .
Some may argue that careful considera-
tion of the distribution of jobs, such as
undertaken in Table 4 of this paper, should
overcome some of the criticism put for-
ward by Turok and Wannop (1990) and
enable the relative cost per job of different
schemes to be considered more carefully .
Other critics have argued that the differ-
ence in methodologies between studies
undermine most cost-per-job comparisons
(Polytechnic of Central London, School of
Planning, 1990) . Even this criticism can be
countered, as far as possible with the detail
available from published reports, by care-
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PAUL FOLEY
fully studying the minutiae of evaluation
reports and attempting to standardise the
presentation of results . This has been
undertaken in this review and the results
are presented in Table 6 . But even then, as
the next section reveals, it is not possible to
compare the results in any meaningful
way . But first it is worth briefly noting the
major differences between studies high-
lighted by Table 6, since other studies
(Polytechnic of Central London, School of
Planning, 1990, p . 64) have taken many
results from studies at face value without
trying to establish if they are comparable
(from a methodological viewpoint) .
Table 6 attempts as far as possible, with
the information available from evaluation
reports, to provide a standardised form of
presentation for cost-per-job figures de-
rived from eight of the nine evaluation
reports (the Segal Quince Wicksteed
(1989) study did not provide cost-per-job
figures) . Construction jobs are omitted
from all calculations . Where secondary
effects have been provided these are in-
cluded . Long-term multiplier effects are
omitted from all calculations since most of
the infrastructure schemes will operate
over broadly the same time-scale and they
have only been included in one study (PA
Cambridge Economic Consultants, 1987) .
For training and advice schemes costs are
for `positive outcomes' ; this includes fur-
ther training as well as obtaining a job . All
cost-per-job figures have been revised to
provide current prices (April 1991) to aid
comparison . Full details regarding the
major elements included and excluded in
each calculation are provided in the foot-
notes to Table 6 .
This paper will not linger on the merits
of each scheme since-as the next section
shows-this would be largely futile, des-
pite the attempts that have been made to
try and standardise the basis for compari-
son between projects . All that really can be
concluded is that infrastructure projects
tend to cost more per job than training and
company-assistance schemes . The merits
of comparison are perhaps best exempli-

LOCAL ECONOMIC POLICY AND JOB CREATION
fled by a statement from one of the studies
which found that "variation within each
category of project tends to be greater than
between categories" (Turok and Wannop,
1990, p . 38) . Since this was the conclusion
of a study which adopted exactly the same
methodology when comparing similar
types of project, there are obviously signifi-
cant influences acting on the results . These
factors are likely to come from two
sources, either internal factors, such as the
way a project is administered, or external
factors, such as the economic environment
within which the project is operating.
10. Problems of Comparison Using Cost
per Job as an Output Measure
Comparison of the Results of Evaluation
Studies
This final section of the paper will focus on
the merits of trying to compare cost-per-
job calculations between studies . It has
already been acknowledged that a wide
range of other factors, such as additional
non-employment benefits of schemes or
their wider social costs and benefits, also
need to be considered . Many studies have
suggested that if only methodological dif-
ferences between studies could be over-
come there would be a legitimate basis for
comparison of results (Bovaird, 1981 ; JU-
RUE, 1986a, 1986b ; Polytechnic of Cen-
tral London, School of Planning, 1990) .
Such a simple solution to the dilemma
facing many policy-makers attempting to
select the most cost-effective policy or
initiative to promote job creation effici-
ently is probably unattainable .
The ease with which an individual is
able to get a job, and thus the effectiveness
of many initiatives, will be affected by
many different factors . Some factors are
personal, concerning characteristics such
as an individual's skills, experience, ethnic
origin or gender. Other factors relate to
economic conditions in the wider national
or local economy . An important (non-
personal) characteristic is the overall level
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5 89
of employment growth in an economy . It is
commonly acknowledged that local em-
ployment growth is determined by the
health of the national economy (Morison,
1987). The level of aggregate demand in an
economy remains a major determinant of
employment in the economy (Rajan,
1985). In general, the rate of growth of
output needs to increase to sustain a given
level of employment .
National factors and conditions obvi-
ously influence local economies . It is very
difficult for local economies to grow when
national economies are in decline . As a
result, national conditions will obviously
affect local economies and thus the cir-
cumstances in which initiatives operate .
Some studies have argued that the success
of some employment initiatives is "due to
the strength of the local economy" (Hay-
ton, 1990, p . 69). Gordon (1985, p . 49)
notes that "the level of unemployment in
London is to a large extent determined by
the pressure of demand for labour in the
wider economy rather than more local
factors" . Doeringer et al. (1987), in an
econometric study in the US, found that
states with a mix of industries which
performed well nationally had higher em-
ployment growth than stated with slower-
growing industries . Similar results from
shift-share analysis have been found for
UK (Fothergill and Gudgin, 1982) .
The level of employment growth in a
local economy will have a major effect on
the ability of an economic development
initiative to create employment. The most
simple example is the level of positive
outcomes from training schemes . During
periods of employment growth and higher
demand for labour the number of trainees
leaving a scheme for jobs or further train-
ing (the criteria for a positive outcome)
should increase. Equally, schemes offering
advice or financial assistance to small
businesses . should be more productive : an
expanding economy requires more goods
or services, and therefore opportunities for
an increase in output and employment
creation will be more abundant . Even

5 90
infrastructure schemes are likely to be
affected by the level of prosperity in a local
economy . Developments will be more eas-
ily let and perhaps obtain higher densities
of employment (per square foot) during
more prosperous times .
Levels of economic and employment
growth within an economy will be affected
by two main factors, time and local charac-
teristics. These two ' factors are important
because they will affect the ability of any
economic initiative to create jobs . Surpris-
ingly, these are two factors which many
evaluation studies have failed to consider,
or have only considered in passing with
little reference to the considerable impact
they can have on the ability of initiatives to
create employment opportunities . Each of
these factors and their effect on job-
creation potential at economic initiatives
will be considered separately .
Time
Growth in national and local economies is
generally cyclical in nature. The recessions
of the early 1980s and late 1980s were
separated by a period of relative growth for
both national and most local economies .
The evaluation study of Industrial and
Commercial Improvement Areas (JU-
RUE, 1986a) undertaken in 1983/84 notes
that "the measures have been pursued
during a period of severe recession" but no
consideration is given of the effect this
may have had on the effectiveness of the
initiative or costs per job . Changes in
conditions over time have a considerable
effect on recruitment patterns . Cyclical
changes in the demand for labour affect
total unemployment, and these changes are
exacerbated for youth unemployment
(Gleave and Sellens, 1984) . Conditions
which produce high overall unemployment
produce high youth unemployment (Brit-
ish Youth Council, 1977 ; Makeham, 1980 ;
Lynch and Richardson, 1982) . Jones
(1983) found that a smaller proportion of
youngsters leaving school in 1981 found
jobs than those leaving in 1979 . Those
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PAUL FOLEY
finding jobs in 1981 were relatively well-
qualified despite the fact that a smaller
proportion of the jobs were skilled than
two years previously .
The above examples are primarily re-
lated to the demand for youth workers .
The current decrease in the late teenage
cohort (often referred to as the demo-
graphic time-bomb; National Economic
Develoment Office, 1989) highlights the
fact that the relationship is not simply one-
way ; supply factors in the labour market
also vary over time. Changing local eco-
nomic circumstances over time can there-
fore have a considerable effect on the
ability of an initiative (in a single area) to
have a consistent long-term effect in a
locality .
Local Factors
Differences in economic factors and the
industrial structure of a locality can have
a significant effect on employment and
recruitment patterns . Some evaluation
reports note the influence of these factors
but none of the studies has attempted to
compare the effectiveness of policies be-
tween different geographical areas. For
instance, the targeted training study
(Turok and Wannop, 1990, p . 90) notes
that the effectiveness of training initiatives
and subsidy schemes is affected by local
economic circumstances, but results are
not disaggregated geographically to inves-
tigate these effects nor is any attempt made
to indicate the scale of these effects on
initiatives .
Two studies, once again related to youth
employment, have highlighted the signifi-
cance of local characteristics . An advan-
tage of these two studies is that they
analysed employment patterns for school-
leavers. This effectively controls a number
of variables (though others such as ethni-
city may remain) related to skills and
previous work experience which might
influence recruitment patterns amongst
potential employers . The first study under-
 LOCAL ECONOMIC POLICY AND JOB CREATION
taken by Roberts et al. (1986) in 1985
interviewed school-leavers in Liverpool,
Walsall and Chelmsford . Job prospects for
those without good `0' levels varied with
locality . In the more prosperous area of
Chelmsford, CSEs were giving school-leav-
ers the same opportunities that required
`0' levels in less-prosperous Liverpool .
The second study of school-leavers under-
taken by Richardson (1983) in five London
boroughs (Bromley, Hammersmith, Houn-
slow, Lambeth and Tower Hamlets) in
1976 found that "there were clear differ-
ences in overall unemployment rates be-
tween inner and outer borough residents .
These differences were greater for girls but
they did not disappear for either sex with
the passage of time after the school leaving
date" (Richardson, 1983, p . ii) .
Studies examining localities with similar
characteristics have found that unem-
ployment rates for workers with similar
personal attributes are broadly comparable
within major urban areas (Department of
Employment, 1977 ; Garner et al., 1988) .
However, studies examining localities with
different characteristics (Richardson,
1983 ; Roberts et al., 1986) have found
differences in employment opportunities .
Although the precise causes of these differ-
ences are difficult to establish it is clear
that local job opportunities, and thus the
potential effectiveness of economic initia-
tives, do vary spatially . Local character-
istics can therefore have an influence on
the effectiveness of initiatives . This is a
consideration which none of the evalua-
tion studies has explicitly investigated .
The Validity of Comparison between
Evaluation Studies
In nearly all the evaluation studies re-
viewed in this paper, differences exist
between the duration of initiatives, the
duration of evaluation-study periods or the
localities in which the same initiative has
been introduced . The one exception is the
study of Newcastle Metropolitan Region
(Robinson et al., 1987) which investigated
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591
different initiatives in a single locality
during a single time period (1974-84) . The
results of comparison between the initia-
tives in this study should be more reliable .
More single-area studies are required be-
fore the validity of comparisons between
different evaluation studies can be estab-
lished. Additional evaluation studies, per-
haps simply re-examining data from exist-
ing evaluation studies, of the same type of
initiative during the same time-period in
different localities would also be beneficial .
Conversely, studies of a single initiative
over a long time-period in a single locality
could also provide a beneficial insight into
the validity of comparison between
studies.
However, even if these additional 'con-
trolled' evaluation studies could be com-
pleted, problems may still remain . It has
been suggested that many straightforward
empirical evaluations greatly simplify the
links between policies and effects (Turok,
1990) . Morison (1987) states that confu-
sion has arisen through attempts to treat
the symptoms rather than the causes of
regional and local economic problems . In
many ways cost-per-job calculations, or
even cost per unemployed (young, disabled
or alternative measures of individual dis-
advantage) person who gets a job are
seeking to measure the economic effective-
ness of treating the symptom rather than
the cause . There is a danger that initiatives
may be perceived as cost-effective in a
narrow sense, when in reality they are
getting nowhere near curing the cause of a
problem . Indeed, even if projects can
provide jobs (for disadvantaged groups)
within a locality at a cost-effective rate
there is likely to be a threshold at which
demand is satisfied and over-supply results
(JURUE, 1986b). A comparable effect has
occurred in the small-business accommo-
dation market where the provision of units
by local authorities, who thought they were
cost-effectively supporting economic de-
velopment, appears to have driven out the
private sector (Ambler and Kennett, 1985 ;
Fothergill et al., 1987) .
59 2
Conclusion
Calls for an increase in the number of
evaluation studies (House of Commons
Public Accounts Committee, 1986, Robin-
son and Wren, 1987 ; National Audit
Office, 1988) appear to have been ac-
cepted. The number of evaluation studies
completed in the last three years has
increased significantly . This increase ap-
pears to have been stimulated by a growing
recognition of the need for many organisa-
tions to be seen to be publicly accountable .
Pressure to achieve higher levels of `value
for money' have also increased. This has
led many evaluation studies to place
greater emphasis on financial issues such
as economy and efficiency .
The increase in the number of evalua-
tion studies has been matched by a growing
sophistication in the studies which have
been undertaken . A clear evolution in
evaluation methodologies can be observed .
Early studies rarely considered secondary
factors or estimates of cost per job . These
have now become commonplace in most
evaluation studies . In addition, greater
attention is now being focused on the
beneficiaries of economic policy .
There is evidence of a growing concern
with the impact of local economic policy
(Audit Commission, 1989 ; Turok, 1990) .
During the early 1980s it was generally
thought that the benefits of economic
development initiatives would `trickle
down' to those most disadvantaged in the
labour market . By focusing policies on
geographical localities with the highest
proportions of disadvantaged groups it was
thought these groups would receive the
benefits of economic growth which arise
from investment in economic develop-
ment initiatives or projects. Some of the
evaluation studies reviewed in this paper
have shown that these benefits have not
always been as tightly focused as originally
expected. At some initiatives, less than 25
per cent of jobs were obtained by the
unemployed and often only a small pro-
portion of jobs created are suitable for
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PAUL FOLEY
the low level of skills which many of
those disadvantaged in the labour market
possess .
Evaluation studies should attempt to
investigate the characteristics of the benefi-
ciaries of economic policy . The tendency
of some studies simply to concentrate on
broad overview of the alleviation of the
symptoms of urban problems, such as jobs
created or cost per job, should be avoided.
Encouragingly, an increasing number of
studies are now investigating the number
of jobs created which are obtained by
groups such as the unemployed, inner-
city residents, the unskilled, females and
those from ethnic-minority groups . It is
important this trend continues . In addi-
tion, it is important that studies should
try to investigate how policies operate .
As well as investigating the recipients of
jobs in greater detail, the effectiveness of
policies in overcoming the causes of dis-
advantage should also be examined more
closely.
Evaluation studies should not become
too sophisticated or complex in their
methods of evaluation. The reason
evaluation fell out of favour in the late
1970s was that the level of sophistication
and complexity developed by studies be-
came incomprehensible and divorced
from the policy process . Self (1970), writ-
ing more than 20 years ago, noted that
greater rationality in the decision-making
process is not helped, but hindered, by
the use of notional monetary figures
which either conceal relevant policy
judgements or involve unrealistic and
artificial degrees of precision . The em-
phasis on notional monetary values is
particularly pertinent in the light of the
recent financial emphasis of some evalua-
tion studies .
Recent concerns with financial issues in
evalution studies have led more and more
studies to present their results in the form
of cost per job created . Many studies have
suggested that if only methodological dif-
ferences between studies could be over-
come, a standardised basis for comparison

LOCAL ECONOMIC POLICY AND JOB CREATION
of results would exist. Sophisticated
methods of revising costs per job at infra-
structure or investment projects to provide
current costs per job (or job-year) have
been adopted by some studies to assist
in comparisons, but the value of these
calculations, and any comparison of
cost-per-job figures, is questioned in this
paper .
The ability of any individual to obtain a
job is affected by many different factors,
some concerning an individual's personal
characteristics, others relating to the local
economy. Skills, gender and ethnic origin
are just a few of the personal factors known
to influence employability . Evaluation
studies have investigated some of these
factors and in the future it is possible that
analyses of initiatives in terms of their
ability to create jobs for individuals with
particular characteristics may become
prevalent .
The other set of factors concerning em-
ployment creation comprises conditions
in the local economy . These conditions
change over time, largely reflecting the
health of the national economy . At any
one time, different localities will have a
different number (or proportion) of job
vacancies . During prosperous times, or in
prosperous areas, there will be a higher
level of job vacancies and the disadvan-
taged should have a better opportunity to
secure employment . These two simple
factors, time and locality, will have a
significant effect on the ability of any
economic initiative to create jobs, parti-
cularly jobs for more disadvantaged
groups .
For nearly all the different types of
project evaluated the specific time and
locality of an initiative will have an influ-
ence on the project's ability to create jobs .
Regrettably, few studies have investigated
this issue . This influence will be greatest
for investment projects, small-business ad-
vice schemes and training projects . Differ-
ent levels of employment creation will
result at these projects depending upon the
time they are undertaken or conditions in
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59 3
the local economy . The importance of time
and locality may be slightly reduced at
infrastructure projects, but even in this
case a development in a more prosperous
area, or in more prosperous times, will be
let more easily and probably with a greater
density of employment (per square foot)
than a similar scheme in less prosperous
circumstances . Until such variations can
be accommodated in comparative studies
it would be unwise to accept any simplistic
comparison of cost-per-job figures created
by different types of initiative .
Evaluation studies are useful in high-
lighting the different effects of policy .
Whilst comparisons between some aspects
of studies may not be possible, evaluation
is important in a number of different ways .
First, the studies reviewed in this paper
have shown that the problems for disad-
vantaged groups in obtaining employment
persist. Greater attention in targeting poli-
cies is required if this problem is to be
alleviated .
Secondly, many of the difficulties facing
policy-makers are highlighted . Any at-
tempt to intervene within a market eco-
nomy by offering financial assistance or
attempting to attract additional funding
will be problematical . The relatively low
levels of leverage which some initiatives
have been able to obtain emphasise the
difficulties of trying to attract private-
sector funding for some projects . Equally,
the relatively high levels of deadweight
spending at some projects only serve to
underline the difficulties of intervening
effectively within a market economy.
Finally, evaluation studies can provide a
useful input to the policy-making and day-
to-day management process . Evaluation
may not always provide the results policy-
makers would like to hear, but by learning
from results it should be possible to reduce
the replication of mistakes and increase
the benefits identified by studies . To
achieve these benefits, evaluation studies
should continue to be disseminated to the
wider public, academic and policy-making
audience.
594
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