Economic Growth IN THE UNITED STATES OF AMERICA A County-level Analysis

All materials on our website are shared by users. If you have any questions about copyright issues, please report us to resolve them. We are always happy to assist you.
 197 views
of 53

Please download to get full document.

View again

Description
Economic Growth IN THE UNITED STATES OF AMERICA A County-level Analysis. April Harris Elana Kaufman Sohair Omar Elizabeth Pearson. Objective. To explore the factors driving differences in regional economic growth across the United States.
Share
Transcript
Economic GrowthIN THE UNITED STATES OF AMERICA A County-level Analysis April Harris Elana Kaufman Sohair Omar Elizabeth Pearson Objective
  • To explore the factors driving differences in regional economic growth across the United States.
  • To replicate the analysis in the OECD paper, “The Sources of Economic Growth in OECD Regions: A Parametric Analysis,” (December 2008) for the U.S. case.
  • Agenda
  • Theory
  • Data
  • Summary Statistics
  • Results
  • Findings/Conclusion
  • Future research/Recommendations
  • Questions
  • What theories explain economic growth?
  • Neo-Classical Theory
  • Endogenous Growth Theory
  • New Economic Geography (NEG)
  • Neo-Classical Theory Assumes Diminishing Returns And Exogenous Technology
  • Key assumptions:
  • Capital is subject to diminishing returns
  • Perfect competition
  • An exogenously determined constant rate reflects the progress made in technology
  • 3 Key factors:
  • Capital intensities
  • Human capital
  • Technology (not included in the model; exogenous)
  • Neo-Classical Theory Predicts Convergence Exogenous Technology
  • Long-run growth is the result of continuous technological progress, which is determined exogenously
  • Key implication: Conditional convergence
  • Problems
  • Limited empirical evidence of convergence
  • Leaves technological progress out of the model
  • Endogenous Growth Theory Assumes Diminishing Returns and Endogenous Technology
  • Key assumptions:
  • Capital is subject to diminishing returns
  • In many endogenous growth models the assumption of perfect competition is relaxed, and some degree of monopoly power is thought to exist.
  • 3 Key factors:
  • Physical capital
  • Human capital
  • Technology (included in the model: endogenous)
  • Endogenous Growth Theory: Internal factors are the main sources of economic growth
  • Investing in human capital  the development of new forms of technology & efficient and effective means of production  economic growth
  • Investment in human capital (education and training of the workforce) is an essential ingredient of growth
  • The main implication: policies which embrace openness, competition, change and innovation will promote growth.
  • Theory emphasizes that private investment in R&D is the central source of technical progress
  • No convergence is predicted.
  • New Economic Geography: Why is manufacturing concentrated in a few regions?
  • Economic geography: the location of factors of production in space
  • Key Implication
  • Despite early similarity regions can become quite different!
  • Key factors causingagglomeration or dispersion
  • Economies of scale
  • Transportation costs
  • Location of demand
  • Population
  • New Economic Geography predicts that the right mix of key factors causes growth
  • How does differentiation occur?
  • General NEG model answers
  • One region slightly larger
  • +
  • transportation costs 
  • +
  • IRS
  • +
  • larger initial production
  • =
  • more people & production spatially close together
  • This will allow the larger initial region to grow while the smaller initial region does not - or does so to a lesser degree and at a slower rate.
  • How does NEG differ from Neo-Classical and Endogenous Growth Theories?
  • NEG takes scale into account
  • NEG models propose that external increasing returns to scale incentivize agglomeration
  • Agglomeration captures, via scale effects, how small initial differences cause large growth differentials over time
  • We obtained data on 3,079 counties between 1998-2007 Theories? Per Capita Personal Income Theories?
  • Ranges from $8,579 in Loup County, NE to $132,728 in Teton County, WY
  • Used to create three variables:
  • Dependent variable: annualized per capita personal income growth1/10 * ln(income in 2007) – ln(income in 1998)
  • Highest: 7% in Sublette, WY
  • Lowest: -3% in Crowley, CO
  • Mean: 1%
  • Independent variable: log of income in the initial year, 1998
  • Highest: $76,450 in New York, NY
  • Lowest: $7,756 in Loup, NE
  • Independent variable: per capita personal income in nearby counties, weighted by distance and other spatial measures
  • Infrastructure Theories?
  • A measure of Physical Capital.
  • Mileage of major roads by county
  • Airports by county
  • Major Road Mileage by County Theories? Number of airports by County Theories? Education Rates Theories?
  • Source: 2000 Census
  • Percent of population with less than high school degree
  • Highest: 62.5% in Starr, TX
  • Lowest: 4.4% in Douglas, CO
  • Median: 21.6%
  • Percent of population with a high school diploma
  • Highest: 53.5% in Carroll, OH
  • Lowest: 12.4% in Arlington, VA
  • Median: 34.7%
  • Percent of population with more than a high school degree
  • Highest: 82.1% in Los Alamos, NM
  • Lowest: 17.2% in McDowell, WV
  • Median: 41.4%
  • These three variables add up to 1
  • (Capture above info in bar graph)
  • Innovation Index Theories? [COMING SOON] Employment Rate Theories?
  • Source: 2000 Census (for cross-section)
  • Youth employment rate: population aged 16 – 20 that is working divided by total population 16 – 20
  • Highest: 100% in Loving, TX
  • Lowest: 8.78% in Shannon, SD
  • Median: 46.2%
  • Working age employment rate: population aged 21 – 65 that is working divided by total population 21 – 65
  • Highest: 88.4% in Stanley, SD
  • Lowest: 35.9% in McDowell, WV
  • Median: 73%
  • Total employment rate
  • Highest: 86.7% in Stanley, SD
  • Lowest: 33.6% in McDowell, WV
  • Median: 69.9%
  • (NEED BAR GRAPH!)
  • Employment Specialization Theories?
  • What is it?
  • Measure of industrial concentration of a region (county)
  • What is it meant to capture?
  • Captures notion of agglomeration
  • What is agglomeration?
  • The close spatial concentration of industry
  • A determinant of economic growth in NEG growth theory
  • How is it modeled?
  • Specialization indices
  • Herfindahl Index
  • Krugman Index
  • Employment Specialization Theories?
  • Herfindahl Index (HI)
  • Definition:
  • NΣi=1 s2
  • Features:
  • Ranges from 0 to 1.0
  • 0 = industrial diversity (lots of firms)
  • 1 = lack of industrial diversity (one or few firms)
  • Is an absolute measure; Does not take neighbors into account
  • Employment Specialization Theories? Employment Specialization Theories?
  • Krugman Index (KI)
  • Definition:
  • KI = ∑j|aij-b-ij|
  • a = the share of industry j in county i’s total employment
  • b = the share of the same industry in the employment of all other counties, -i
  • KI = the absolute values of the difference between these shares, summed over all industries
  • Features:
  • Ranges from 0 to 2.0
  • 0 = county i has industrial composition identical to its comparison counties
  • 2 = county i has industrial composition without any similarity (no common industries) to its comparison counties
  • Is a relative measure; Compares to one’s neighbors. It’s our choice!
  • Employment Specialization Theories? Employment Specialization Theories? Employment Specialization Theories? Employment Specialization Theories? Accessibility to Markets/Distance to Markets Theories? [PENDING] OLS Results Theories? OLS Results Theories? OLS Results Theories? OLS Results Theories? OLS Results Theories? OLS Results Theories? OLS Results Theories? OLS Results Theories? OLS Results Theories? OLS Results Theories? OLS Results Theories? OLS Results Theories? OLS Results Theories? OLS Results Theories? Modeling Spatial Relationships Theories?
  • Inverse Distance
  • K-Nearest Neighbor
  • Contiguity
  • Contiguous Counties Theories? The average county has 5 to 6 neighbors (main point) Theories? How many neighbors does the… Global Spatial Autocorrelation Theories? Growth rates display spatial dependence…Moran’s I…Null hypothesis Own growth rates depend on neighbors (idea) Theories? Main Findings Theories? Future Research Theories? Questions Theories?
    Related Search
    We Need Your Support
    Thank you for visiting our website and your interest in our free products and services. We are nonprofit website to share and download documents. To the running of this website, we need your help to support us.

    Thanks to everyone for your continued support.

    No, Thanks