Category Archives: Economy

The Wage and Job Impacts of Hospitals on Local Labor Markets

Source: Anne M. Mandich, Jeffrey H. Dorfman, Economic Development Quarterly, Vol 31, Issue 2, 2017
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From the abstract:
This study examines the impact of hospitals on local labor markets in rural and urban counties. We measure the ability of hospitals, particularly in rural communities, to attract nonhealth-related employment and provide higher wage jobs to residents based on their education level. Results find hospital employees with an associate’s degree can expect a 21.4% wage premium, when compared with alternative opportunities, and those with a bachelor’s degree can earn 12.2% more working in a hospital. Hospitals are shown to be positively related to overall employment as well as exhibit positive employment spillover. For rural counties, a short-term general hospital is associated with 559 jobs in the county, 60 of which are hospital based and 499 are non–health care related. With the positive benefits on wages and non–health care job growth, hospitals have measurable positive labor market outcomes above their primary objective of providing health care access, particularly in rural counties.

States Weigh the Price of Financial Incentives for Business Development

Source: Lisa Mckinney, Capitol Ideas, Vol. 60, No. 2, March 2017

Financial incentives for economic development are intended to motivate a business to locate or relocate in a specific state, expand their facilities or create more jobs. GASB 77 is reflective of a shift in state legislatures to more closely track the efficacy and return on investment of tax abatements and other financial incentives for economic development.

Building jobs in the Rust Belt: The role of education

Source: Dana Mitra, The Conversation, April 11, 2017

….When asked how to improve Rust Belt communities, the answer of working-class residents is still “jobs, jobs, jobs.” In other words, residents hope that a mega-corporation will ride in like a white knight and employ the community, yet steel and coal are unlikely to make a strong comeback in the United States.

As a researcher of education policy at Penn State, I wanted to explore whether K-12 schools in the Rust Belt region were still preparing young people for the mill towns of old or were responding to the economic realities of today. What adaptations might they make to build upon the resources that still exist in Rust Belt communities?….

Six charts that illustrate the divide between rural and urban America

Source: Brian Thiede, Lillie Greiman, Stephan Weiler, Steven C. Beda, Tessa Conroy, The Conversation, March 16, 2017

…We’ve all heard of the great divide between life in rural and urban America. But what are the factors that contribute to these differences? We asked sociologists, economists, geographers and historians to describe the divide from different angles. The data paint a richer and sometimes surprising picture of the U.S. today….

The Short-term Effects of the Kansas Income Tax Cuts on Employment Growth

Source: Tracy M. Turner, Brandon Blagg, Public Finance Review, OnlineFirst, March 29, 2017
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From the abstract:
The state of Kansas made dramatic changes to the structure of its personal income tax by eliminating taxation of business income and lowering marginal tax rates on other personal income sources. Proponents of the legislation maintain that the tax reductions will stimulate employment growth. Using a difference-in-differences approach, we estimate the impact of the tax changes on private-sector employment in the state of Kansas, relative to its border states, using data on the number of establishment employees and proprietors. We apply multistate county fixed effect model and county-border matching approaches to identify tax effects. Our findings indicate that two years post enactment, the tax law changes have not yielded a net increase in private-sector employment.

In Search of Rural Jobs, States Weigh Strategy With Checkered Past

Source: Jen Fifield, Stateline, March 30, 2017

In rural communities across the country, jobs are disappearing and people are moving away, driving a desperation that helped elect Donald Trump president.

But as state lawmakers look for ways to bring life to these long-struggling areas, many are falling prey to a complex economic development approach, pushed hard by investment firms that stand to benefit, that has failed to live up to its promises.

The so-called rural jobs bills have been proposed in at least 11 states this year, and last week in Utah, Gov. Gary Herbert, a Republican, signed one into law. Under the bills, state tax credits are awarded to companies that agree to invest in or loan money to funds set up by investment firms or other brokers. The funds then invest the money in rural businesses. The proposals are the latest iteration of an approach that at least 20 states and Washington, D.C., have turned to in the last three decades.

But states that have evaluated the multilayered subsidized lending programs — originally CAPCO (certified capital companies) programs and later New Markets Tax Credit programs — have found that they failed to deliver promised jobs and tax revenue.

Three firms — Advantage Capital Partners, Enhanced Capital and Stonehenge Capital — have led the lobbying for the programs and have been the main participants in several states. ….

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Robots and Jobs: Evidence from US Labor Markets

Source: Daron Acemoglu, Pascual Restrepo, National Bureau of Economic Research, NBER Working Paper No. 23285, March 2017

From the abstract:
As robots and other computer-assisted technologies take over tasks previously performed by labor, there is increasing concern about the future of jobs and wages. We analyze the effect of the increase in industrial robot usage between 1990 and 2007 on US local labor markets. Using a model in which robots compete against human labor in the production of different tasks, we show that robots may reduce employment and wages, and that the local labor market effects of robots can be estimated by regressing the change in employment and wages on the exposure to robots in each local labor market—defined from the national penetration of robots into each industry and the local distribution of employment across industries. Using this approach, we estimate large and robust negative effects of robots on employment and wages across commuting zones. We bolster this evidence by showing that the commuting zones most exposed to robots in the post-1990 era do not exhibit any differential trends before 1990. The impact of robots is distinct from the impact of imports from China and Mexico, the decline of routine jobs, offshoring, other types of IT capital, and the total capital stock (in fact, exposure to robots is only weakly correlated with these other variables). According to our estimates, one more robot per thousand workers reduces the employment to population ratio by about 0.18-0.34 percentage points and wages by 0.25-0.5 percent.

Austerity in the Aftermath of the Great Recession

Source: Christopher L. House, Christian Proebsting, Linda L. Tesar, National Bureau of Economic Research, NBER Working Paper No. 23147, February 2017
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We examine austerity in advanced economies since the Great Recession. Austerity shocks are reductions in government purchases that exceed reduced-form forecasts. Austerity shocks are statistically associated with lower real GDP, lower inflation and higher net exports. We estimate a cross-sectional multiplier of roughly 2. A multi-country DSGE model calibrated to 29 advanced economies generates a multiplier consistent with the data. Counterfactuals suggest that eliminating austerity would have substantially reduced output losses in Europe. Austerity shocks were sufficiently contractionary that debt-to-GDP ratios in some European countries increased as a consequence of endogenous reductions in GDP and tax revenue.

Good Intentions versus Effective Outcomes: An Analysis of Selected New Mexico Tax Incentives

Source: Greg LeRoy, Thomas Cafcas and Philip Mattera of Good Jobs First, and Lisa Christensen Gee and Dylan Grundman of the Institute on Taxation and Economic Policy, March 2017

From the blog post:
A study released today examining various tax incentives and tax accounting practices in New Mexico found that the state could gain more than $206 million per year by enacting safeguards common in other states. The study also finds that New Mexico lags behind most other states in making public relevant information about its tax incentive programs.

Those are the main conclusions of “Good Intentions versus Effective Outcomes,” a study released today by Good Jobs First, a non-profit, non-partisan research center.

With Amazon.com’s agreement to collect gross receipts tax on in-state sales, a fair application of the same tax to all online retailers could boost state revenues by almost $42 million. The state also has the opportunity to close a loophole that costs the state at least $27 million by fully enacting combined reporting (which prevents multi-state companies from shifting profits and tax burdens away from New Mexico). The study also recommends the phasing out of the High Wage Jobs Tax Credit program, which costs $70 million per year, and that the state also consider reversing a corporate income tax accounting rule (single sales factor apportionment) that costs the state $45 million per year and has not increased manufacturing jobs.
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