Dan S. Rickman

Regional Computable General Equilibrium Modeling: A Survey and Critical Appraisal

Regional computable general equilibrium (CGE) models have grown in popularity in recent years as an alternative method to examine regional economies and regional policy issues. However, the contribution of regional CGE models has yet to be assessed. Therefore, this paper surveys the literature related to regional CGE modeling. The survey includes a discussion of the contributions that CGE models have made to regional economic analysis. In addition, the basic approach of regional CGE modeling is outlined, and the key features of existing regional CGE models are detailed. The paper also appraises of the current state of the art of regional CGE modeling and suggests future research directions.

The waxing and waning of regional economies: the chicken–egg question of jobs versus people

Abstract A central question in urban and regional economics is whether people follow newly created jobs into regions, or whether jobs follow newly arrived migrants. This study revisits the issue by constructing structural vector autoregression (SVAR) models for the 48 contiguous states. The SVAR models contain long-run identifying restrictions based on a simple labor-market model. The empirical results suggest that labor-demand shocks are generally more important than migration labor-supply shocks, although labor-supply innovations in total account for a majority of state employment fluctuations. Thus, it is slightly more likely that people are following jobs. Yet, the relative importance of demand and supply shocks greatly varies by period and region.

The REMI Economic-Demographic Forecasting and Simulation Model:

This article presents the Regional Economic Models, Inc. (REMI) Economic-Demographic Forecasting and Simulation (EDFS) model, which is used for regional forecasting and policy simulation in both the private and public sectors in the United States. The detailed structure of the model is presented. To illustrate the dynamic simulation properties of the model, results of two sample simulations for a REMI multi-area model of a region in Southern California are presented. Post-sample historical forecasts for all U.S. states are provided to evaluate the forecasting capabilities of the model.

The Causes of Regional Variations in U.S. Poverty: A Cross-County Analysis

The persistence of poverty in the modern American economy, with rates of poverty in some areas approaching those of less advanced economies, remains a central concern among policy makers. Therefore, in this study we use U.S. county-level data to explore potential explanations for the observed regional variation in the rates of poverty. The use of counties allows examination of both nonmetropolitan area and metropolitan area poverty. Factors considered include those that relate to both area economic performance and area demographic composition. Specific county economic factors examined include economic growth, industry restructuring, and labor market skills mismatches. Copyright 2000 Blackwell Publishers

The Geographic Diversity of U.S. Nonmetropolitan Growth Dynamics: A Geographically Weighted Regression Approach

Spatial heterogeneity is introduced as an explanation for local-area growth mechanisms, especially employment growth. As these effects are difficult to detect using conventional regression approaches, we use Geographically Weighted Regressions (GWR) for non-metropolitan U.S. counties. We test for geographic heterogeneity in the growth parameters and compare them to global regression estimates. The results indicate significant heterogeneity in the regression coefficients across the country, most notably for amenities and college graduate shares. Using GWR also exposes significant local variations that are masked by global estimates suggesting limitations of a one-size-fits-all approach to describe growth and to inform public policy. (JEL R11, R23)

An SVAR Model of Fluctuations in U.S. Migration Flows and State Labor Market Dynamics

Large internal migration flows are typically viewed as evidence of flexible U.S. labor markets adjusting to asymmetrical regional demand shocks. Yet, amenity-induced migration flows suggest that they may not necessarily facilitate adjustment to demand shocks and instead may be destabilizing. This paper employs a structural vector autoregression model with long-run identifying restrictions to account for both labor-demand and labor-supply shocks in examining the role of migration in U.S. regional labor-market fluctuations. The results reveal that less than one-half of innovations in state migration flows are responses to labor-demand shocks. It is not until the third period that migrants fill a majority of demand-induced jobs in a typical state, while it takes about 7 to 8 years for migration flows to fully adjust to labor-demand shocks. The extent of the migration response also has implications for how much state and local economic development policies benefit original residents.

Distance from Urban Agglomeration Economies and Rural Poverty

Despite strong national economic growth and significant poverty reduction during the late 1990s, high poverty persisted in remote rural areas. This study uses a geographical information system county database to examine the nexus between rural U.S. poverty and remoteness. We find that poverty rates increase with greater rural distances from successively larger metropolitan areas (MAs). We explain this outcome as arising from the attenuation of urban agglomeration effects at greater distances and incomplete commuting and migration responses to lower labor demand in rural areas. One implication is that remote areas may particularly experience greater reductions in poverty from place-based economic development policies.

High-Poverty Nonmetropolitan Counties in America: Can Economic Development Help?

Despite significant poverty reductions in nonmetropolitan America during the 1990s, Census 2000 reports that hundreds of counties still possess high poverty rates. They have not only populations that are disproportionately minority, lack education, and live in single-parent households, but also weak job growth and low levels of labor force participation. To assess the potential antipoverty benefits of economic development in high-poverty counties, the authors compare their poverty-generating process with that of remaining nonmetropolitan counties. A primary finding is employment growth reduces poverty more in high-poverty counties. Likewise, completion of high school and obtaining an associate degree reduce poverty more in these counties. These patterns also hold for counties with persistently high poverty across decades. Thus, the authors are guardedly optimistic that high-poverty counties, even those where poverty has been persistent, will experience reduced poverty if economic development policies successfully stimulate job growth and increase human capital.

Differences in State Unemployment Rates: The Role of Labor and Product Market Structural Shifts

State unemployment rates diverged dramatically in the 1980s. Differing unemployment rates across states are an important public policy concern because of equity concerns and the pure human consequences of higher unemployment. Moreover, at the national level, a greater dispersion in state and regional unemployment rates can increase the natural rate of unemployment and shift the Phillips curve out because of an inefficient allocation of the labor force [3; 38]. One possible cause for the divergence in unemployment rates is national industrial restructuring. U.S. industrial restructuring was suggested by Lilien [26] as a cause for the rise in the national unemployment rate. Moreover, national restructuring can have differential impacts across states because states can have dramatically different mixes of industries from each other. One of the difficulties of national restructuring from a regional perspective is that it is difficult to avoid. On the other hand, if regional differences in unemployment are due to state idiosyncratic causes, state and local public policy can potentially play a more active role. For example, the economic problems that plagued the Northeast and California during the early 1990s have been typically attributed to national downsizing in the defense industries. Conversely, economic problems in these states may have been driven by factors that are located within the state, such as the collapse of their real estate markets.

Trends in U.S. income inequality: Evidence from a panel of states

Many studies have attempted to explain the sharp increase in U.S. income inequality. These studies typically used time series data of the U.S. or compared the trends in the U.S. with those in other countries. We employ panel data from 1960-1990 for the 48 contiguous states to examine trends in U.S. income inequality. Advantages of our panel data set include the addition of a large number of sufficiently similar cross-sectional units and extension of the period of analysis to before the increase in U.S. income inequality. Based on state fixed effect estimates, we find that greater international migration, greater metropolitan shares of population, and increased percent of households headed by females increase income inequality while greater participation rates decrease income inequality. Also, advanced stages of economic development may increase income inequality. Other factors such as unionization did not affect state income inequality.