Matthew P. Drennan

The Economic Benefits of Public Investment in Transportation A Review of Recent Literature

This article reviews the recent literature on the long-term economic benefits of public investments in transportation. It organizes the literature into six groups according to the type of benefit being measured, namely, output; productivity; production costs; income, property values, employment, and real wages; rate of return; and noncommercial travel time. The central question addressed by the papers reviewed is whether public investments in transportation yield long-term economic benefits. While the different studies arrive at different numerical answers, most of them do indicate a positive and statistically significant relationship between such investments and economic benefit measures. Transportation planners engaged in the effort to win funding for the best of competing projects would gain by an awareness of that economic benefit literature and by applying the methods to measuring benefits of their projects.

Gateway Cities: The Metropolitan Sources of US Producer Service Exports

The USs exports of producer services increased threefold in the 1980s. Those exports plus the repatriation of income from foreign affiliates of US producer service firms now equal US agricultural exports. This paper documents the growth and composition of those producer service exports and then attempts to identify their metropolitan sources. Four metropolitan areas, and particularly their central cities, stand out as having both high concentrations and specialisations in producer service industries and as being the location of the head offices of the largest producer service firms. Ordinary least-squares equations are presented for one of the cities, New York, which links the citys producer services sector to US exports of producer services. For the total private gross city product of New York City, the elasticity with respect to US exports of producer services ranges from +0.19 to +0.25.

The Interruption of Income Convergence and Income Growth in Large Cities in the 1980s

Recent studies have documented the divergence of per capita personal income among regions of the US in the 1980s following many decades of income convergence. This paper establishes the same pattern of divergence for median family income in the 1980s and argues that regional specialisation in producer services contributed to upward divergence of regions with above average income. Because producer services are concentrated in cities, the growth of median household income in the 51 largest US cities over the 1980s is analysed, for all households and for black households. Regression results indicate that cities more specialised in producer services at the beginning of the decade had much better growth than cities more specialised in manufacturing. The results for black households were very similar to the results for all households.

Possible Sources of Wage Divergence among Metropolitan Areas of the United States

Much of the literature on sub-national income convergence relates to states and regions. This paper focuses upon metropolitan areas as the germane geographical units for studying income convergence. Evidence of metropolitan wage divergence, the opposite of convergence, is presented. A theoretical basis for wage divergence is found in endogenous growth models and in two-sector trade models. Cross-section regression equations are estimated in which the level and the growth of metropolitan wages are related to variables that the empirical evidence and the theory suggest may be important sources of wage divergence.

Sectoral Shares, Specialisation and Metropolitan Wages in the United States, 1969-96

We investigate the effect of specialisation upon the level of metropolitan wage per worker. Specialisation is measured by the share of metropolitan earnings in each of five traded goods and services sectors. Sectoral specialisations are assumed to be determinants of location-specific productivity, which in turn is treated as a term in a metropolitan production function. Panel data are used for estimating that production function for 313 metropolitan areas in the US, over the long period 1969-96 and two shorter periods. We find that some specialisations raise average metropolitan wages, some lower it and some have no effect, and that the effects of specialisation differ by time-period.

The Present and Future Fiscal Problems of the Two New Yorks: What Happened This Time

The state and city of New York have chronic fiscal difficulties, namely, expenditures that tend to exceed revenues by significant amounts. The deficits were moderate in the 1980s but have become large and acute in the 1990s as the state and city economies have been in a prolonged recession. Deficits are expected to continue well into the future. Supply side factors, particularly high wage levels, are the main causes of the states deficits. For the city, supply side factors, particularly high employment, and demand side factors are main causes. Federal aid reduction is a minor cause. The citys fiscal condition is compared with that of the thirty other largest U.S. cities in a regression analysis which updates Gramlichs analysis of the period immediately before the famous New York City fiscal crisis of 1975.

Do agglomeration economies decay over short distances? Are they stable in the face of shocks? Evidence from Manhattan

ABSTRACT This paper analyzes agglomeration economies of four producer service industries in Manhattan applying panel regression to a sample of zip codes and years. Agglomeration economies accrue to producer services in Manhattan, and they decay with distance from their core. Applying the same analysis to three goods production and distribution industries in Manhattan, none show evidence that inferred agglomeration economies decay with distance. Did the shock of 9/11, destabilize the intense concentration of producer service establishments in Manhattan? No. However, the natural experiment of forced relocation shows a strong preference for midtown Manhattan locations over downtown Manhattan locations.

The Economic Cost of Disasters: Permanent or Ephemeral?

This landmark book covers a range of issues concerning the consequences of terrorist attacks. Beginning with a discussion of new policies and strategies, it then delves into specific areas of concern, modeling a range of possible scenarios and ways to mitigate or pre-empt damages.

Income Inequality: Not Your Usual Suspect in Understanding the Financial Crash and Great Recession

Abstract Rising income inequality was a major factor in the surge of household debt that brought on the financial crash and Great Recession. Other studies have identified rising household debt as a cause of the crash but not income inequality as a cause of the rising debt. Here the unusual rise in household debt post 1995 is documented. Econometric evidence links rising income inequality to the rise of household debt. Consumer expenditure data shows that prices of major necessities —shelter, healthcare and education—rose faster than inflation as demand by high-income households surged. In order to maintain their consumption of such necessities, lower-income households resorted to massive borrowing. Their rising debt precipitated the financial crash and Great Recession. That link was overlooked by mainstream economists because they adhere to a theory of household consumption that posits no role for income inequality.

Economics: Diminishing Marginal Utility

What has economics taught us over the past few decades? Serious contributions have been made, contends the author, but faith in free markets has displaced analysis of real markets. He argues that economics education needs to be changed.