In recent years, cities across the United States have increasingly turned to the arts and culture as a tools to foster local economic development. One strategy gaining popularity is the official designation of cultural districts by local governments. These districts often receive broad forms of support, such as technical assistance, promotional efforts, or strategic planning resources. In some cases, they may also receive more tangible benefits, including tax incentives or grants. Regardless of the type of support, these districts aim to promote local development, support the creative sector, and strengthen neighborhood identity, which may in turn lead to new jobs, livelier streets, and a stronger community identity.
In a recent study, my coauthor Gary A. Wagner and I explored whether these place-based policies lead to real, measurable changes in local employment. Our focus was on five U.S. states that have invested in formal, state-certified cultural districts with tangible financial incentives: Louisiana, Maryland, Iowa, New Mexico, and Texas. Together, these states have designated over 200 cultural districts since 2005. Our research aimed to determine whether businesses within these districts experienced more employment growth than those in nearby, similar areas without such designation.
Our findings indicate that cultural districts can indeed foster job growth, particularly among art and cultural-related establishments.
What Are Cultural Districts?
Cultural districts vary widely in form and function, but they are generally understood as areas with a high concentration of artistic and cultural amenities. These can include museums, theaters, galleries, historic landmarks, and similar institutions. Such areas also host festivals, performances, and other events that celebrate the local culture and heritage.
Some cultural districts emerge gradually as artists, cultural organizations, and creative businesses cluster in a neighborhood over time. Others are established through formal designation by local or state agencies. Our study focused on the latter. We view these formal districts as a form of “creative placemaking,” an approach that promotes investing in the arts not just for their intrinsic value, but also for their ability to improve how neighborhoods function and feel as places to live, work, and visit.
Why Does This Matter?
Many towns and cities, particularly those experiencing economic stagnation or population decline, are searching for new ways to revitalize neighborhoods and generate jobs. Cultural districts offer a locally rooted alternative to conventional strategies like large infrastructure projects or corporate tax incentives. Rather than trying to import growth, these programs aim to build on the culture, talent, and character a place already possesses.
Despite their growing popularity, there has been limited empirical evidence on whether cultural districts actually meet these goals. That’s where our study comes in.
How We Evaluated Cultural Districts
To assess the effects of cultural district designation on employment, we used a type of statistical method called “difference-in-differences.” The basic idea is to compare changes in employment in areas that became cultural districts to similar areas that did not, but that were on similar economic trajectories before designation. This approach helps us isolate the effect of the cultural district policy from other factors that might be affecting employment more broadly.
Using geocoded establishment employment data from the National Establishment Time Series database, in conjunction district boundary maps, we focused on 188 state-certified cultural districts in five states between 2005 and 2019. These five states all offer some form of direct financial support to artists and cultural establishments, such as grants, sales tax exemptions, or historic preservation credits. The richness of the data allowed us to classify businesses by type using standard industry codes, which in turn helped us examine whether the effects of cultural districts vary across different kinds of establishments.
What We Found
Our analysis revealed that employment in arts and cultural establishments increased by approximately 2–4% in areas that received cultural district designation, compared to similar areas without such designation. These employment gains were primarily observed in existing businesses, suggesting that cultural district policies helped strengthen the operations of established cultural organizations rather than attracting a significant number of new businesses.
However, we failed to find similar job gains in non-arts sectors, such as retail or food services. This means that while cultural districts might generate broader benefits like foot traffic or tourism, these effects did not appear to translate directly into job creation outside the core cultural sector.
Culture as a Catalyst
Cultural districts have the potential to support local job growth, especially when paired with financial incentives that directly assist artists and arts-based businesses. Among the tools available, grants appear to be especially effective, though other policies like tax exemptions also show promise.
Job creation is only one part of the story. Cultural districts also aim to enhance community pride, strengthen neighborhood identity, and promote social cohesion. These outcomes are harder to measure, but no less important. As more communities embrace cultural district policies, it will be important to understand not only their economic impact, but also how they shape residents’ experiences of place, belonging, and opportunity.
These programs remind us that culture is more than entertainment. It can also be a meaningful force in building stronger, more resilient communities.
About the article
Wagner, G.A., Portillo, J.E. Cashing in on culture: local employment effects from art and cultural district designation. J Cult Econ 48, 645–684 (2024). https://doi.org/10.1007/s10824-024-09517-x
About the authors
Javier E. Portillo is an Associate Professor of Economics at the University of Louisiana at Lafayette
Gary A. Wagner is the Acadiana Business Economist/BORSF Eminent Scholar Endowed Chair in Economics position at the University of Louisiana at Lafayette
About the image
jc.winkler, CC BY 2.0 , via Wikimedia Commons
