Capita Personal Income Research Articles

Beyond Globalization: Localized Returns to IT Infrastructure Investments

HICKS D. A. and NIVIN S. R. (2000) Beyond globalization: localized returns to IT infrastructure investment, Reg. Studies 34 , 115‐127. This paper reports evidence of localized returns to the massive information-processing technology (IT) investments made during the 1980s. It uses two indicators of regional economic performance: (1) real per capita personal income growth; and (2) real output-per-worker growth. After introducing controls for a variety of human capital variables and broader regional business base and population dynamics, we find that the larger a region's installed base of networked IT systems, the more vigorous were the industry-mix shifts underlying regional output-per-worker gains. However, this effect is powerfully mediated by regional economic scale. No evidence of IT-induced income gains was found. These findings lend support for a reconsideration of the conventional wisdom that IT technologies have as their primary influence the erosion of the significance of time, space and place in an economy. Instead, the returns to such IT investments are powerfully mediated by their marked spatial distribution. HICKS D. A. et NIVIN S. R. (2000) Au-delà de la mondialisation: les rendements locaux des investissements dans la technologie de l'information, Reg. Studies 34 , 115‐127. Cet article fournit des preuves des rendements locaux des investissements énormes dans la technologie de l'information pendant les années 1980. On se sert de deux indicateurs de la performance économique régionale: à savoir, 1). la croissance du revenu individuel réel par tête et 2). la croissance du rendement réel par ouvrier. Une fois introduit des contrôles eu égard à diverses variables relatives au capital humain et aux dynamiques plus larges quant à la structure commerciale régionale et à la population, il s'avère que plus grande est la base de systèmes informatiques interconnectés implantée, plus vigoureux ont été les changements de la structure industrielle qui sous-tendent les gains de rendement régionaux par ouvrier. Cependant, cet effet se voit fortement influencer par l'échelle économique régionale en question. Il n'y avait aucunes preuves de gains de revenu provoqués par la technologie de l'information. Ces constats viennent à l'appui de l'argument en faveur d'une remise en cause de l'idée reçue qui affirme que la principale influence sur les technologies de l'information c'est la baisse de l'importance du temps, de l'espace et de la place dans une économie. Plutôt, les rendements de tels investissements dans la technologie de l'information sont fortement influencés par leur distribution géographique marquée. HICKS D. A. und NIVIN S. R. (2000) Jenseits von Globalisierung: örtliche Rückkehr zu Investietierungen in der Infrastruktur der Informationstechnologie, Reg. Studies 34 , 115‐127. Dieser Aufsatz berichtet über Beweise örtlich begrenzter Rückkehr zu den massiven Investierungen in der Datenverarbeitungstechnologie der achtziger Jahre. Er benutzt zweierlei Indikatoren regionalwirtschaftlicher Leistung: 1) tatsächlicher, persönlicher pro-Kopf-Einkommenszuwachs, und 2) Zunahme der tatsächlichen Leistung pro Arbeiter. Nach der Einführung von Kontrollen für eine Vielfalt verschiedener Veränderlichen des Menschenkapitals, sowie einer breiten regionalen Geschäftsbasis und stärkeren Dynamik der Bevölkerung stellten die Autoren fest, daß, je größer die in einer Region installierten Basis vernetzter IT Systeme, umso kräftiger waren auch die Verschiebungen in der Mischung von Industrien, welche die Grundlage des regionalen Ertrags pro Arbeiter bilden. Diese Wirkung wird jedoch vom regionalen Umfang der Wirtschaft stark abgewandelt. Es gab keinerlei Anhaltspunkte für Einkommenszuwachs, der auf IT beruhte. Diese Befunde befürworten ein erneutes Überdenken der herkömmlichen Ansicht, daß in der Wirtschaft IT-technologien die Überwindung der Bedeutung von Zeit, Raum und Ort sind. Stattdessen wird Wiederaufnahme solcher IT-investierungen stark durch ihre ausgesprochen räumliche Streuung abgewandelt.

Three Problems of the Validity of Income Differences Thesis on Internal Migration

We examined the explanatory power of income differentials model which explains internal migration in post-war Japan. Using prefectural data for 1955-95, we performed lots of cross-sectional regression analysis every year based on (1) two types of regional division (10 regions and 36 regions), (2) three kinds of dependent variables (net migration rates, in-migration rates and out-migration rates) and (3) four kinds of dependent variables (differentials of per capita distributed income, per capita personal income, per capita non-personal income, and per capita employer's income).The results of our analysis are summarized as follows.First, regional division affects the results of internal migration in postwar Japan to some extent. It affects little when net migration rates are explained, but especially in the regression analysis of in-migration rates of 36 regions the values of Β estimate show negative sign instead of positive sign of 10 regions during two equilibrating periods of internal migration.Second, differentials of per capita distributed income explain the net migration rates greatly, but those explain the in-migration rates and out-migration rates of 10 regions weakly, and in-migration rates of 36 regions shows negative sign during two equilibrating periods of internal migration.Third, we can use differentials of per capita distributed income as the proxy variables of per capita personal income, because differentials of per capita distributed income have the same explanatory power as differentials of per capita personal income.Fourth, income differentials model has the most explanatory power in the case of (1) long distance migration in which people move out of their local labor markets completely and (2) net migration in which out-migration offsets in-migration.

Housing and Economic Vitality in Rural Midwestern Counties

In response to major restructuring of the economy in America's Heartland, numerous development policies and programs have been implemented. Often, howeves these efforts have emphasized employment opportunities andpopulation growth, but have not attended to housing needs. In this research, the authors examine the relationship between housing and non-metropolitan county economic vitality. Vitality is an index composed of three variables: per-capita earnings in all industries, per capita personal income, and proportion of persons above poverty. The results of a regression analysis of 1990 data support the argument that housing contributes to county economic vitality. Four housing variables were significant: the proportion of renter-occupied housing and the occupancy rate were positively related to vitality; and the proportion of mobile (manufactured) homes and the proportion of units in structures with 5 or more units were negatively related to economic vitality. Median value of owner-occupied units was not a sign8cant indicator related to vitality. The findings suggest that housing contributes to county vitality in complex and sometimes conflicting ways (e.g., rental housing and high occupancy rates generally add to vitality, but structures with 5 or more units and mobile/manufactured homes do not). The finding that economic vitality in 1980 was the most powerful variable in predicting 1990 vitality indicated that the level of vitality in one decade may continue its influence into the next decade.

Local Bank Office Ownership, Deposit Control, Market Structure, and Economic Growth

The restructuring of commercial banking has heightened interest in its economic consequences both for the economy as a whole and for those most likely to bear adverse consequences: small businesses, small banks, and rural areas. Most previous research on bank restructuring focuses on changes in bank behavior. In contrast, this paper focuses on the empirical association between local economic performance and changes in local bank market regulation and structure. Findings suggest that mergers or acquisitions of local banks by nonlocal banks need not impair local economic growth, and may even have beneficial effects in rural markets, with the possible exception of farm-dependent areas. These findings are derived from empirical models that relate both shortrun and longrun growth in real per capita personal income to geographic restrictions on bank activity, local bank (deposit) market concentration, local or nonlocal ownership of local bank offices, and local or nonlocal control of local bank deposits.

A Simple Test for Convergence of Metropolitan Income in the United States

The prevalent test for income convergence used in many recent studies of convergence across spatial economic units in the United States is to use a regression equation in which income growth is regressed against the initial level of income (this is known as β convergence). That method, however, has been crtiticized as an instance of Galton's fallacy of regression. We devise a simple test for the income β-convergence hypothesis which does not suffer from “Galton's fallacy” and apply it to all of the metropolitan areas of the United States for the period 1969–1995. For the test we use two income measures: per capita personal income and average wages. Our results conclusively support convergence of per capita personal income and of wage per worker for metropolitan areas in the United States. We also test for σ convergence, the hypothesis of diminishing dispersion in income among places over time, and find no support for the hypothesis.

Metropolitan Governance Structure and Income Growth

There has long been debate on the extent to which the structure of government in metropolitan areas helps or hinders income growth. Polycentrists contend that numerous local governments lead to competition that streamlines government, produces services at least cost, and leads to higher incomes. Centristts argue that large, multiple service governments have scale economies leading to more efficient production of services and hence higher incomes. What matters to regionalists is whether there is a metropolitan governance arrangement that effects an improvement in the distribution of economic activity that increases income. Which school of thought is right? This article evaluates the association between metropolitan governance structures and growth in per capita personal income among <287 of the largest metropolitan statistical areas for the period 1976 to 1996. After controlling for several factors, we find empirical support for the centrist and regionalist schools of thought but very little support for the polycentrist school.

Spatial and Temporal Metropolitan and Nonmetropolitan Trends in Income Inequality

ABSTRACT Overall total inequality for state per capita personal income as well as total inequality for nonmetropolitan and metropolitan areas are examined for the period 1969 to 1995. In each case, the total inequality was partitioned into between‐and within‐region variations. Statistical testing shows no perceptible differences between the major categories, nonmetropolitan and metropolitan. Further, this study uses a model to test for narrowing of income gaps within these categories. It was found that for both nonmetropolitan and metropolitan, a general trend toward equality was evidenced during the early 1970s decade. In that decade, the nonmetropolitan areas’incomes approached the metropolitan areas’incomes but showed significant divergences in the 1980s, followed again by a narrowing of the gaps in the 1990s.

The growth effects of sport franchises, stadia, and arenas

This paper investigates the relationship between professional sports franchises and venues and real per capita personal income in 37 standard metropolitan statistical areas in the United States over the period 1969 to 1994. Our empirical framework accounts for the entry and departure of professional football, basketball, and baseball franchises; the construction of arenas and stadia; and other sports related factors over this time period. In contrast to other existing studies, we find evidence that some professional sports franchises reduce the level of per capita personal income in metropolitan areas and have no effect on the growth in per capita income, casting doubt on the ability of a new sports franchise or facility to spur economic growth. We also find evidence that results obtained from estimating reduced-form relationships, a common practice in the literature, are not robust to alternative reduced-form specifications. © 1999 by the Association for Public Policy Analysis and Management.

Net income, gross billings and practice expenses of independent dentists.

One way to measure the vitality of a profession is to look at the trend in its practitioners' real incomes. During the 10-year period 1986 through 1995, the average real net income of all independent dentists rose 30.7 percent, or 2.7 percent annually, after being adjusted for inflation using 1995 U.S. dollars. The national per capita personal income (base = 1995) increased 10.1 percent during this same period, or about 1.0 percent annually [corrected]. Using real per capita income as a benchmark, the authors found that the purchasing power of dentists as a group has increased more rapidly than the purchasing power of the overall U.S. population.

Convergence in State Nominal and Real Per Capita Income: Empirical Evidence

This article examines convergence in per capita personal income among the 50 states from 1960 to 1991. Evidence presented in previous studies is mixed concerning whether convergence took place during the period in question. By allowing for differences in cost of living across states, however, the authors find that convergence took place throughout the entire period studied.

The Growth Effects of Sport Franchises, Stadia and Arenas

This paper investigates the relationship between professional sports franchises and venues and real per capita personal income in 37 Standard Metropolitan Statistical Areas in the United States over the period 1969-1994. Our empirical framework accounts for the entry and departure of professional football, basketball and baseball franchises; the construction of arenas and stadia; and other sports-related factors over this time period. In contrast to other existing studies, we find evidence that some professional sports franchises reduce the level of per capita personal income in metropolitan areas and have no effect on the growth in per capita income, casting doubt on the ability of a new sports franchise or facility to spur economic growth. We also find evidence that results obtained from estimating reduced form relationships, a common practice in the literature, are not robust to alternative statistical model specifications.

A Regional Study of Net Migration Rates of College Students

In this study, we examine the determinants of college student migration based on a sample of 50 states in 1992. Major findings show that the net migration rate of college students is negatively correlated with per capita personal income, tax burdens, and crime rates, but positively associated with the number of colleges and universities, expenditure per student, educational level of the population, and growth rate of employment. Past migration also significantly affects current migration. The unemployment rate and the wage rate in manufacturing are found to be insignificant.

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.

What level of dialtone penetration constitutes ‘universal service’?

This paper focuses on estimating whether a natural level of non-penetration exists, and if so, what the maximum attainable penetration rate is. Universal service penetration levels have steadily increased over the last decade. This paper hypothesizes that penetration levels will level off over time at some point below 100%. Econometric models have been created to estimate penetration rates as a function of several explanatory variables, including per capita personal income, price changes for residential local service, price changes for toll services, and the existence of lifeline programs. The modeling results also provide information on cross-elasticities between toll and local service and the effects of the FCC's subscriber line charges and lifeline programs on the universal service policy goal. In summary, this research provides new information on the topic of what constitutes universal service and provides considerable data regarding own-price and cross-price elasticities associated with residential local service.

Impact of Consumer Installment Debt on Food Expenditures

Trends in consumer installment credit over the period 1980 to 1989 are discussed; as well, a two‐equation recursive model is developed to identify and assess the impact of installment credit on food expenditures. The first equation concerns factors affecting the ratio of consumer installment credit to personal disposable income, namely habit persistence, expected income, the prime interest rate, the unemployment rate, and the percentage of the population aged 25 to 44. The second equation focuses on factors affecting real per capita food expenditures, namely the real price of food, real per capita personal disposable income, seasonality, and a polynomial distributed lag of the measure of the ratio of consumer installment credit to personal disposable income from the first equation. The ratio of installment credit to personal disposable income has a positive effect on food expenditures; over the long run a one percent change in this ratio leads to a 0.15 percent change in real per capita food expenditures. On average, it takes just over six months for a change in this ratio to be transferred to food expenditures.

The Changing Context of State Political Economy

Increasingly, attention has turned to state governments and their economies. This new field of inquiry has been plagued by a paradox. Specifically, while many observers describe heightened economic activism among the states, there is a paucity of evidence indicating that such activity makes any difference. This study presents a simple model of state political economy and examines it in three periods: 1968-1973, 1974-1979, and 1980-1985. Using pooled cross sectional time-series analysis it is found that states have become more autonomous economic domains over the course of these periods and, as they have, state level political attributes have come to play an increasing role in shaping growth in per capita personal income.

A simple demand function for higher education

Because of the shrinking pool of high school graduates and college-age students, there are renewed interests in college enrollment projections. Based on a proposition of human capital theory that an increase in the expected rate of return to education brings more people to schools, a simple demand function for college enrollments may be constructed. Following Levine, Koshal, Koshal, and Lindley [NYEconomic Review, Fall 1988, pp. 3-18], it is viewed that each prospective student makes an investment in oneself as human capital. In addition, the cost of such investments, the availability of resources for financing education, and economic conditions may also influence such investment decisions. The demand for enrollment in higher institutions is measured by college enrollment rates (CERs), which are obtained by dividing total college degree enrollments by the sum of high school graduates in the current and three preceding years. CER is principally determined by real per capita personal income (INC), the cost (price) of college education, which is measured by a weighted average of tuition and room and board charged by public and private colleges (COST), state's rate of unemployment (UNEMP), and dummy variables to account for qualitative factors (DUM). It is expected that both the INC and UNEMP variables have positive signs, and the COST variable to have a negative sign. To estimate the demand for college enrollments in Mississippi, the CER is regressed on the independent variables, using data for the 1965-86 period. The regression results are:

The Nonmetropolitan South in the 1990s: Convergence or Stagnation?

For the past 25 years, members of this Association, together with a few select nonmembers, have made major contributions to the theory and measurement of regional economic growth and development and to the development and implementation of regional, state, and local economic development policy. However, the question of whether those theories of regional growth and development can lead to unequivocal policy recommendations for a region like the nonmetropolitan South remains unresolved. Will there continue to be inevitable marketdirected convergence in wages and per capita personal income as predicted by the staunchest neoclassical believers, those described as “neoclassical moonies” by Richardson (see Miernyk, 1982)? Or will the nonmetropolitan South continue forever to be on the end of the product cycle described by Norton and Rees (1979)? Or will the agglomerative and exogeneous forces described by Williamson (1980) and Hansen (1972) lead to divergence between metropolitan and nonmetropolitan wages and per capita incomes? Or, will the future story of the nonmetropolitan South be some combination of the above?

Ridge regression: A multivariate analysis of criminal activity

The objective of the paper is to apply the statistical procedure of ridge regression to a multivariate model of criminal activity. The explanatory variables are of an economic, apprehension, and seasonal nature. The Time Shared Reactive On Line Laboratory (TROLL) computer package was used in estimating all regression coefficients and other pertinent statistics. The economic variables, which included per capita personal income, hours worked, and plant closing dummy variable, were found to be statistically related to criminal activity. In addition, police expenditures as well as the three seasonal dummy variables were statistically associated with the dependent variable. A comparison is made between the results obtained from the ordinary least squares procedure and the ridge regression approach.

An Exploration into States' Commitment to AFDC

There are great differences in the level of income that state governments provide to poor families with children. This study attempts to identify, through a stepwise regression analysis, statistically significant determinants of maximum monthly AFDC payments in the state. Controlling for other variables in the multiple regression model, the percentage of nonwhite population in the state is found to be the strongest predictor of the level of maximum monthly AFDC payments (a negative relationship). Per capita personal income and tax effort in the state are also found to be statistically significant predictors of the dependent variable (positive relationships).