Daniel Otto

The Effects of Housing Prices, Wages, and Commuting Time on Joint Residential and Job Location Choices

A utility maximizing framework is used to model how wages, housing prices, and commuting time affect joint decisions of where to live and where to work. The implied multinomial logit model yields plausible estimates of the role of economic variables on joint residence/job location choices.

Effects of an Oxygen Requirement for Fuel in Midwest Ethanol Markets and Local Economies

This article examines the effects of an oxygen content requirement for fuel in several midwestern states. Ethanol could dominate the midwestern oxygenate market with federal incentives for ethanol blending or a generalized ban on MTBE; otherwise, price incentives would shift between ethanol and MTBE. Several states would share in the ethanol output expansion, but the largest increases would likely occur in Iowa and Minnesota. A benefitcost analysis of the oxygen requirement suggests that gains for consumers, producers, and local economies would more than offset lost federal tax revenues.

Measuring the Impact of Meat Packing and Processing Facilities in Nonmetropolitan Counties: A Difference-in-Differences Approach

Considerable controversy exists regarding the costs and benefits of growth in the meat packing and processing industry for rural counties. This study investigates the effects of this industry on social and economic outcomes in nonmetropolitan counties of 23 Midwestern and Southern states from 1990 to 2000. Results suggest that as the meat packing industrys share of a countys total employment and wage bill rises, total employment growth increases. However, employment growth in other sectors slows, as does local wage growth. Industry growth has little impact on local crime rates or on growth of government spending on education, health, or police protection.

Innovation in Structural Change of Local Government

Describes a theoretical model that endogenizes structural changes in local government institutional structure and relates selected economic and social functions to these institutional innovations. Use of the model to test factors affecting county governments decisions to adopt alternative service delivery methods; Variables indicating county financial status.

Economic Linkages between Agriculture and Other Sectors within Rural America

Examines the relationship between agriculture and communities in rural areas in the United States. Link between economics and agriculture; Historical indicators of performance in the farm and nonfarm sectors of midwestern states; Information on agricultural output at the beginning of the 1985 farm bill.

ECONOMIC DEVELOPMENT EFFECTIVENESS OF MULTICOMMUNITY DEVELOPMENT ORGANIZATIONS

Multicommunity development organizations (MDOs) are one strategy implemented by rural communities to promote economic growth. In this paper we evaluate the effectiveness of these organizations and the attributes that influence their success in attracting and retaining jobs. Several factors within MDO control were found to influence the ability of such organizations to attract new employment opportunities. Organizations with larger budgets and staff were found to be more effective in job creation. Traditional economic and locational variables, as well as the institutional characteristics of the MDOs, were important when evaluating their success in job retention. Older MDOs with larger budgets in regions with higher levels of manufacturing employment, higher average earnings per job, and lower per-capita income were most successful at retaining existing employment opportunities.

Rural Housing Market Response to Nonfarm Employment Growth: An Analysis of Housing Development Patterns

This paper describes uses of economic impact models to examine labor force and housing relationships associated with regional employment changes, including area-wide labor demands, expected housing needs in response to changes in the labor force size, and the predicted quantity of new housing units that will be developed. The perspectives analyzed represent important elements in economic development planning, especially in light of the tremendous competition for firms and workers among cities and states in the U.S. today. Rural development officials report difficulty attracting residential labor force members and reason that the absence of housing starts in rural places is inhibiting future growth prospects. The paper demonstrates how input-output, econometric, and spatial analysis methods can be combined to assist decision makers in determining the overall value of regional economic growth and the labor and housing impacts of that growth. Special attention is given to delineating the spatial dimensions o...

Local Services in the New Federalism: Discussion

The paper by Hushak undertakes the difficult task of assessing the history of U.S. fiscal federalism and of addressing the implications of the current era of reduced state and federal intergovernment revenues for local government. It is hard to argue with the conclusion that property taxes, user charges, and bonds will remain the major source of local revenues, given the limitations on revenue options and local governmental needs for operating funds. However, continued reliance on these traditional funding sources does not preclude local governments from seeking to become more efficient and finding alternative mechanisms for providing local services. In developing the motivations for the current brand of New Federalism, Hushak argues that the reduction in federal intergovernmental aids is a response to excessive federal participation in financing local government services where the perceived marginal social value of output is less than the marginal social cost. This perception of a social product worth less than its marginal social cost, along with a general disenchantment with big government, certainly has contributed to the effort to curtail government. However, as these cuts work their way through the system, we are getting evidence that reality does not match perceptions. In response to the reduction in federal assistance, many states apparently are deciding that marginal social benefits of some government services are greater than their costs and they are raising taxes in order to continue providing services. Many local governments face similar situations. Hushaks presentation focuses on revenue sources and does not include information on local expenditures. The contrasting pattern of local government expenditures to the financing patterns provides a lesson in the issues and problems of the New Federalism experiment. Expenditure by a unit of government is a generally accepted proxy for the extent to which that level of government provides the service. Based on data from the Advisory Commission in Intergovernmental Relations (ACIR), local governments were the dominant provider of fire protection, sewage, other sanitation, local parks and recreation, police, library, and local education. State government led in spending for higher education, corrections, highways, and noncash public welfare. The federal government was first in the domestic functions of natural resource development, water and air transport, special education, services, health, and cash public welfare. For these services, local government accounted for 43% of direct expenditures, state government for 27%, and federal government for 30% of the total. However, the responsibility for financing the provision of these services is often shared with other levels of government and with the imposition of varying degrees of control on the recipients. Based on ACIR data for seven major governmental functions, the federal government was the chief financier of natural resources, public welfare, housing and urban renewal, and air transportation. States were the most prominent funder of education services and highways. Funding of health and hospitals was shared about equally among all three levels. As the major beneficiary of federal and state grants, local governments were the sole or principal funding source of none of these particular governmental functions. Although data availability limited the number of functions to seven, a comparison of the total financing capacity with the expenditure capacity indicated that the federal government dominated in the financing role (40%) while local g vernment dominated in the direct expenditure role (47%) (ACIR). This discrepancy within a jurisdiction between the level of financial support provided and the level of responsibility for providing local services is at the crux of the problem with the New Federalism. States have long wanted the ability to decide how federal funds Daniel Otto is an assistant professor, Department of Economics, and an extension economist, Iowa State University.