Can City Deals Improve Economic Performance? Evidence from England

Abstract

City deals – place-based agreements between central and local state actors – are an increasingly common intervention for supporting economic performance in urban areas. This paper presents empirical evidence on the effectiveness of city deals by estimating the impact of the UK's City Deals scheme on rates of economic growth, productivity and job creation across England between 2010 and 2019. Because the City Deals were introduced in two waves, we estimate its effects using a differences-in-differences (DiD) with multiple time periods (MTPs) approach. Our DiD estimates indicate that, overall, the City Deals were associated with improvements in local economic performance, but that the first wave of city deals resulted in gains of around 2.5% to 3% that were not observed in the second wave. These results suggest that city deals are most effective when appropriate institutional structures are in place and highlight the value of MTP approaches.