Towards a theory of targeting

A representative economic model is used to analyze local policies to reestablish full employment. It addresses three types of barriers: 1. Rigid wages, 2. Occupational (or industrial) immobility, and 3. Geographic immobility. These factors are considered in the framework of three types of policies: 1. Laissez-faire, 2. Narrowly targeted employment incentives, and 3. Broadly targeted incentives. The paper concludes that the usefulness of the abstract model will depends upon the ability of local development officials to combine the implications of the model with information about the local economic development narrative. In turn, the narrative depends upon an in-depth local knowledge of history, institutions, practices and personalities.