ABSTRACT. A long debate among economists is regional income disparity within the United States. Among several hypotheses, skill-biased technical change has been the prominent one. According to this hypothesis, technological progress in one region increases the demand of high skilled labor in that region. The increase in high-skilled labor demand leads to and increase of the migration of high skill workers from regions with low technological growth. The influx of high skilled labor also leads to an increase in housing cost which could drive low-skilled labor away from the region with high technological progress. Therefore, technological progress could prompt disparity in income between different regions.

While there are studies supporting this hypothesis, the evidence so far is still limited and suggestive. One issue remain is the definition of technological progress. Another issue which has often been ignored in the literature is endogenous growth of high educated people within a region. Previous works often attribute the growth of skilled workers to migration without controlling for endogenous population growth. To put it differently, technological progress could raise return to education perceiving by dwellers within in region, and therefore, technological growth could augment the demand of schooling of local residents.

The contribution of this paper is to tackle the previous raised issues. First, following the literature on innovation and knowledge production function, we use regional patent counts as a proxy of technological progress. Second, we explicitly control for endogenous growth of population using either county specific trend or population growth. The main findings of our paper confirm the hypothesis of skill-biased technical change. That is, we find that technological progress could increase regional high skilled labor and reduce regional low skilled labor through migration. Finally, this technological migration could induce regional income disparity measured by Gini index.

ABSTRACT. this paper develops the empirical tax-induced migration (TIM) literature by studying nonlinear tax-migration relationships, namely threshold effect and asymmetry across tax incentive and tax hindrance. The results suggest that personal income tax has symmetric threshold effects on scientists’ migration. Corporate income tax (CIT) has approximately linear and symmetric effects, while asymmetric threshold effects were found for both investment tax credit (ITC) and R&D research credits. As different types of taxes have distinctive and salient nonlinear effects on migration, policy makers should be cautious in using the average elasticities estimated in the previous literature in policy making.

ABSTRACT. This paper estimates the effect of a skilled graduate visa program on the output of research and innovation at educational institutions in Australia. We study a unique skilled visa program that permits foreign-born graduates from Australian universities the right to live and work in Australia post-graduation. We combine administrative data from the full population of subclass 485 visa applications with institution-level data on research and innovative output at domestic universities from the National Survey of Research Commercialisation (NSRC). Under the hypothesis that there may be knowledge spillovers from the foreign-born graduates to domestic researchers, we expect that foreign-born graduates will increase the research output of institutions. Our empirical strategy overcomes the potential bias introduced by high-skilled foreign-born students sorting into high-quality research institutions by using a combination of fixed effects and instrumental variables models.

ABSTRACT. Female labor market outcomes have received increasing attention from both academic researchers and the popular media. Of particular interest is understanding the experience of women who pursue self-employment. Overall, women have lower self-employment rates than men, and there is evidence that they may face unique challenges in starting and running their own businesses. However, women may also have differing motives for pursuing self-employment than men. In particular, previous research suggests that some women, especially married women with families, may value the flexibility in work schedules that self-employment can offer them. We are especially interested in the self-employment outcomes of married mothers who are college graduates, as college graduates tend to have higher labor force participation rates, greater geographic mobility, and more successful businesses compared to their less educated counterparts. Such women may choose to become self-employed as it may provide them with the opportunity to work either on a more flexible schedule or fewer hours in order to balance their family responsibilities with their career aspirations. An additional factor that may affect their labor force decisions is the availability of child care, and one potential source of child care is the proximity to extended family. To assess this, we use American Community Survey microdata to examine how birth-state residence for married mothers who are college graduates relates to self-employment and hours worked. Our results support our hypothesis that flexibility in hours worked in self-employment is a major factor pulling out-migrant mothers into self-employment, perhaps due to being far away from grandparents and other family who could provide child care. The results also suggest that, in response to fewer child care options, self-employed mothers residing outside their birth-state work fewer hours in their businesses. Conversely, self-employed mothers residing in their birth state appear to have better child care access and are able to work more hours per week.

ABSTRACT. A challenge for regional scientists is how to measure the reorganization of national and local economies in response to natural and other shocks. Depending on the resilience of the impacted system, the reorganization may lead to faster post-shock growth rates, but this is not assured. An economy is a complex, dynamic systems. In this system, the rate of change of output (or gradient) of the different components comprising the system reflects the system’s structure. Using a dynamic economy framework, we propose a method for measuring the reorganization of local economies that underlies the uneven changes rates of industries in U.S. counties over time, and then examine the effect of reorganization on employment growth, income growth, and economic resilience.

We define reorganization as the ability of an economy to reorganize by redistributing employees across industries in response to economic shock or innovation. To identify when the economy of each county was reorganizing at the maximum rate, we estimate the economic distance from year-to-year using the cosine similarity for county-level employment. 2003-2015 6-digit NAICS level employment data from County Business Patterns are used. Then we split the period into pre- and post-recession using the employment distances to address the shift of local economic structures after the recession: Years with low distances (similar economic structures) are included in the same period. We calculate reorganization as the cosine distance between the vector of the annualized change rate of industries in the pre- and post-recession periods. Last, we investigate the changing impact of local factors including reorganization index in explaining employment growth, income growth, and economic resilience for U.S. counties.

We expect our results to explain the roles of industrial composition, the flexibility of labor market, and the reorganization of industrial structure in economic growth.

ABSTRACT. Conventional wisdom indicates that economic specialization can promote economic growth, whereas economic stability is theoretically associated with diversified economies. The conflicting relationship between specialization and diversity has been questioned, as regional scientists suggested that specialization and diversity can coexist in a regional economy and proposed the concept of diversified specializations. To test this proposition empirically, three Herfindahl Hirschman indexes that measure regional economic diversity were used to examine the relationship between economic structure and regional economic performance among 359 metropolitan statistical areas (MSA) in the lower U.S. The first index measures economic diversity across 87 three-digit North American Industry Classification Systems (NAICS) sectors for each MSA; the second index quantifies economic diversity among 51 clusters based on Delgado et al. (Defining clusters of related industries, Journal of Economic Geography 16(1):1-38, 2016); and the third index considers the effects of both industrial and cluster diversity. Evidence confirms that industrial diversity promotes economic stability, and also shows that cluster diversity contributes to both economic stability and growth. I conclude that regions can simultaneously pursue high and stable economic growth.

ABSTRACT. The term "legacy city" is a product of recent scholarship and advocacy to paint older industrial cities in a favorable light, at a time when national demographic patterns indicate a "revival" of the desirability of urban life. In comparison with healthy top-tier cities and cities in abject decline, legacy cities are typically characterized as those places where a complex mixture of assets and challenge provide the city with a unique variety of opportunities and hurdles. Proponents of legacy cities have constructed the term in an attempt to change the narrative around de-industrialized cities as a places of blight and poverty, re-framing the discussion around their unique challenges and distinct competitive advantage. In this paper, I interrogate the construct validity of "legacy cities" by examining how closely the original theory is captured by the operationalization of legacy cities used by policy advocates. I do so by clustering the over 350 U.S metropolitan areas according to theoretically-justified categories, such as the manufacturing industry share or housing vacancy rate. These clusters are then identified according to the primary variables that "drive" them using discriminant analysis.

This analysis is necessitated by the current state of affairs in how legacy cities are operationalized. On one hand, much of the literature refers to specific legacy cities---such as Syracuse, Detroit, or St. Louis---but does not have any empirical mechanism whereby the universe of U.S. cities can be differentiated. On the other hand, the policy advocacy wing of these cities, the Legacy Cities Partnership, does use a parameter to define what a legacy city is, but said uses only a single criterion, which leads to blatant measurement error. The criterion---population loss since peak---fails to capture many other elements of what a legacy city theoretically should be, and due to the stickiness of population, it creates a classification that cities typically cannot 'graduate' from. This paper contributes to the literature surrounding legacy cities by 1) demonstrating an improved method to better distinguish clusters of legacy cities according to the theoretically-justified variables that drive them, 2) structuring this method in such a way that places can shed their legacy city status when recovery and revitalization occurs, and 3) suggesting that the entire conversation about legacy cities be reframed in terms of legacy REGIONS by using the labor market as the spatial unit of analysis.

ABSTRACT. We study the convergence hypothesis for Mexican states during the period 1994-2015 considering the impact not only of NAFTA but also of other external shocks, such as China's entry into the World Trade Organization (WTO) in 2001 and the global financial crisis of 2008. Using econometric panel data models with no fixed effects to avoid small sample bias, and following the methodology developed by Barro (2012), the main results indicate: i) presence of absolute divergence, consistent with a sigma process divergence, particularly in the period after the outbreak of the global crisis of 2008; and ii) a process of weakening conditional convergence across the sub-periods analyzed.

ABSTRACT. The extent to which economic policy uncertainty (EPU) amplifies exchange rate volatility has been an important research question for at least a decade. Previous research has investigated this relationship using monthly data, concluding that EPU imparts an effect on exchange rate volatility either contemporaneously, or with a one month lag. The use of monthly frequency, however, may not provide an accurate causal interpretation, and may even compromise the accuracy of the estimates if the natural cycles of EPU are shorter than a month. To address this econometric concern I construct EPU measures at a daily frequency, and estimate a GARCH model using daily USD/British pound returns. The evidence indicates that EPU contributes to exchange rate volatility much more quickly than monthly data can detect. I also find that general market uncertainty increases volatility more than EPU does.

ABSTRACT. I would like to inform you that I can present only either on 16th or 17th. Thank you very much.

I introduce parking in urban areas as a matching problem. First, I model street parking market as a strategic game and show that the set of Nash equilibrium outcomes of the cruising game is equivalent to the set of stable allocations. However, it is not reasonable to expect the drivers to reach a Nash equilibrium in the decentralized system due to the lack of information and coordination failure. Therefore, a centralized system can improve the market and allocate the spaces more efficiently. I suggest a centralized mechanism with which a parking authority can assign available spaces to drivers in a stable way. The model incorporates residents’ parking spaces, such that visitors could access vacant residents’ spaces. To use the residents' parking spaces, the system needs to protect exclusive property rights over their parking spaces. I show that, however, there is no mechanism that is stable and protects residents' rights. To resolve this issue, I introduce a new concept, a claim contract and suggest a mechanism that protects property rights, is strategy proof for the drivers, and approximates a stable matching. Besides its market-design focus, this paper handles both property-based and property right-based assignment, which were considered separately in the matching theory literature. This is the main theoretical contribution of this paper.

ABSTRACT. In this paper, we focus on tax and public investment competition in a sequential game set up. We demonstrate that, in a timing game, regions choose simultaneous move equilibrium outcomes, if the effect of public investment (strategic substitutes) is higher than the tax rate (strategic complements) effect. On the other side, regions opt for sequential move game outcomes if tax rate effect is stronger than public investment effect. Moreover, there are multiple equilibria in case of sequential move and we cannot select any particular equilibrium based on Pareto dominance or risk dominance criterion. We also show that in sequential move equilibrium, race-to-the-bottom in tax rates is restricted, compared to the simultaneous move game. Further, regions get higher welfare level in sequential move game as compared to simultaneous move game.

ABSTRACT. Since the advent of the Tennessee Valley Authority and the Appalachian Regional Commission, there has been a great deal of government funding that has gone towards regional commissions. Despite this trend, little is known about the economic benefits of the smaller programs. In this paper, I attempt to expand the literature on regional commissions by analyzing the economic gains to the Delta Regional Authority (DRA). The DRA was founded in 2000 to provide government resources to counties in the Lower Mississippi Valley in order to improve economic conditions within the eligible 252 counties. The research period from 2000 to 2016 is used to measure the benefits over time. My focus is on impacts on employment, income, and poverty measures collected from various government sources at the county level. One-to-one propensity score matching is used to generate a counterfactual. Due to the endogenous nature of treatment, I instrument being included in the DRA with a dummy of whether the county is within the Lower Mississippi Watershed or not. With these corrections, my results should be an exogenous estimation of the intent to treat benefits of the DRA. My research finds modest gains in income and decreases in unemployment; however, there is no measurable impact to poverty.

ABSTRACT. The President and Congress are considering legislation to promote substantial investment in domestic infrastructure in the United States. To help inform decisions about future infrastructure investments, information on the economic impacts, benefits and costs of past investments would be valuable. This paper will summarize the findings of a review of literature on these issues, focusing on literature published beginning with publication of David Aschauer’s (1989) and Alicia Munnell’s (1990) seminal studies on the productivity impacts of public capital stocks in the United States. A substantial body of subsequent research has critiqued and built upon Aschauer’s and Munnell’s work, with widely varying results. Alternatives to production function estimation have also been pursued, such as the vector autoregression approach of Pereira (2000) and application of Roback’s (1982) spatial equilibrium theory by Haughwout (2002) to incorporate amenity values as well as productivity effects of infrastructure investments.

Beyond drawing lessons from literature focusing on aggregate impacts of aggregate infrastructure stocks, this literature review will also draw lessons from literature on the impacts, costs and benefits of particular types of infrastructure, including transportation infrastructure (especially highways and roads), water and sewer systems, electric power systems, and telecommunications systems (with emphasis on broadband infrastructure). The review will emphasize, to the extent possible, findings for different geographic contexts; especially comparisons of impacts, benefits, and costs between rural and urban areas. Most of the emphasis of the review of economic impacts will focus on ex post econometric studies found in the peer-reviewed literature, but some attention will also be paid to ex ante estimates based on predictive models such as input-output models, social accounting matrix models, partial and general equilibrium models. Regarding estimates of benefits and costs of infrastructure, it is anticipated that most of the available information will be based on ex ante model-based approaches; though econometric approaches and findings will also be reviewed.

The main objectives of this literature review are to take stock of what is known about the impacts and net returns to different types of infrastructure investments in different contexts (especially in rural areas), and to identify priority areas for further research on these issues that will be of value to future infrastructure policy and program decisions.

References

Aschauer, D.A., 1989. Is public expenditure productive? Journal of Monetary Economics, 23(2), pp.177-200.

Haughwout, A.F., 2002. Public infrastructure investments, productivity and welfare in fixed geographic areas. Journal of Public Economics, 83(3), pp.405-428.

Munnell, A.H., 1990. How does public infrastructure affect regional economic performance? New England Economic Review, (Sep), pp.11-33.

Pereira, A.M., 2000. Is all public capital created equal? Review of Economics and Statistics, 82(3), pp.513-518.

Roback, J., 1982. Wages, rents, and the quality of life. Journal of Political Economy, 90(6), pp.1257-1278.

ABSTRACT. This paper utilizes a U.S. county-level panel data set for the years 2001 through 2016 to estimate the economic impact of ethylene crackers plants. The economic impacts are measured in terms of growth in real per capita personal income and growth in employment. Isolation of the impacts directly attributable to crackers plants is the major challenge of this work and is attempted with a simple dummy variable, with detailed industry employment data from EMSI, and with an instrumental variable methodology. As of 2015 there were 34 operational ethylene cracker plants in the U.S., with 31 of those located in the Gulf Coast region of Texas and Louisiana. Nearly all of these facilities were constructed in the post-war period in the 1950s. As a result of the increased production of shale gas over the past decade an ethylene cracker plant in now under construction in Beaver County, PA and the economic analysis of these production activities as been very limited to this point.

ABSTRACT. The Baby Boomer generation is entering retirement at an increasing rate. For many of these retirees public pension funds, private and public, will provide the majority of their income with Social Security as supplemental income. However, pension funds, both private and public, are underfunded. To remain solvent many pension funds are reducing payments to pensioners (GAO, 2013). In 2008 the Pension Benefit Guaranty Corporation estimated that shortfalls in pension funding may lead to average reductions in benefit payments with a present value of $141,000 (GAO, 2008). Central States Pensions, a multi-employer fund, applied to reduce benefits an average 23 percent for the 407,000 covered by the plan. Such requests were authorized under the Multiemployer Pension Reform Act of 2014 (MPRA) that allows trustees of multi-employer plans (with some limited oversight) to reduce benefits to improve fund solvency (Pension Rights Center). This legislation is a major change from 40 years of shielding workers’ pensions (Fletcher, The Washington Post, Dec. 9, 2014). While the majority of the literature focuses on the impact of pension reductions on households, this paper focuses on their impact on local economies. This paper builds on a preliminary IMPLAN analysis of potential pension reduction by the Central States Pension Fund in six Midwest counties. We specify growth models using IRS county level data, 2010-2015, in a multivariate analysis to estimate the influence of pension incomes on county economic growth. The overall objective of this paper is to estimate a multiplier for the change in pension income.

ABSTRACT. In this paper, we examine whether the effect of an exogenous increase in jobs in the tradable sector on employment in the nontradable sector varies by location and size of the metropolitan area (MSA). Using data on 337 MSAs from the Quarterly Census of Employment and Wages (QCEW) program, we apply the shift-share instrument to isolate the exogenous labor demand shock in the tradable sector and then estimate the effect on employment in the nontradable sector. We find evidence of local multiplier effect. On average, each additional job in the tradable sector generates 1.2 jobs in the nontradable sector. The size of the local multiplier displays substantial heterogeneity; it is significantly larger for inland, and larger MSAs. JEL classification: J23, R11, R23

ABSTRACT. Compared to most other OECD nations, employment growth in South Korea has been fairly slow. Some researchers have suggested this is due to the pace of regulatory reform there compared to that going on in other nations. But it could also be due to lifestyle changes of Korean households, international competitive pressures (e.g., the rise of China's economy), shifts in the nature of the nation's capital investments, and changes in the composition of the nation's exports, among other possibilities. We examine such potential proximate causes across regions of South Korea using a structural decomposition approach. In this paper we apply, for the first time, a shift-share version of structural decomposition analysis developed elsewhere by Dietzenbacher and Lahr (2017). We use data from for regions of South Korea for 2003, 2005, 2010, and 2013 as published by the Bank of Korea. These data are quite detailed, containing 16 regions with 82 industries per region. We interpret the findings on the proximate causes of employment change using seven (7) components by broad sector by region in light of known interregional relocations, international trade agreements, regulatory and other differences across the regions of South Korea. Due to the sheer volume of data we focus the final analysis on just a few regions of interest.

ABSTRACT. Examples of Lucas critique are most frequently based on a macroeconometric modeling framework; in spite of that, similar problems also can occur in other types of economic models. This study provides a simple theoretical case of biased impact assessment, which can be obtained from an input-output model with a highly aggregated industrial structure. Adding shocks to the system, for instance, changes in final demand can imply significant changes in parameters and coefficients. Numerical examples illustrate the consequences of ignoring these unintended parameter changes, and the conclusions are extended towards econometric input-output (e.g., estimations on highly aggregated historical data) and computable general equilibrium (e.g., calibration of production functions) modeling frameworks. Instead of so-called “microfoundations,” one of the possible solutions to fix the problem is to find the appropriate level of industrial aggregation-disaggregation where shocks do not affect the structure and the parameters of the model significantly. This study gives methodological recommendations for these efforts.

ABSTRACT. * Natural Disaster Special Session *

This research examines the differential impact of disasters by type of disaster on the economic output of the sectors of agriculture, industry, and services. The analysis uses a fixed effects regression to examine cross-section and time series data from 1980 to 2013. In contrast to other disaster research that aggregates the data into five-year non-overlapping time periods, this research uses annual data. Separate analyses are conducted for a global sample and a sub-samples of Latin American countries. The results show that droughts are associated with a reduction in agricultural output at both the global level and in Latin America. In Latin America, wildfires have a particularly strong negative impact on agricultural output. Flood increases output in the services sector at both the global level and in Latin America. Industry, on the other hand, shows a decline in output following floods. Only in Latin America did industry see a reduction in output resulting from earthquakes.

ABSTRACT. Natural Disaster Special Session

According to the latest data from National Centers for Environmental Information (NCEI), 2017 ties an all-time record in the most billion-dollar disasters in United States. For the first ten months of 2017, the U.S. experienced 16 separate billion-dollar weather and climate disasters that collectively claimed 282 deaths (NOAA, 2017). These disasters include floods in California, Missouri and Arkansas, tropical cyclones (hurricanes Harvey, Irma and Maria) in coastal areas, severe storms in Colorado, Minnesota, Midwest, Central and South/Southeast, extreme drought in North Dakota, wildfire in the West, freeze in Southeast, and tornados in Midwest, Central, Southeast and South. When disasters occur, they interrupt regional economies not only via the direct impacts in terms of property damages but also through labor market interactions, which will be the focus of this paper. In the baseline model, county-level annual employment and wage are the two dependent variables. We use panel regression with dummy variables for disaster incidences in the county as well as their past incidences. Dummy variables for county and year fixed effects are used to control for unobserved county characteristics and time change. We investigate ten weather and climate disasters: avalanche, drought, flooding, hail, heat, hurricane/tropical storm, severe storm/thunder storm, tornado, wildfire and winter weather. Disaster incidences in the neighboring counties are included as an explanatory variable, because this helps to control for the spatial spillover effects of weather and climate disasters (Belasen and Polachek, 2008, 2009). The impact of past events, are controlled for using a dummy variable indicating past incidences. This paper is a synthetic study that covers impacts of multiple weather and climate disasters on local labor market in the U.S. Findings in this paper show that weather and climate disasters have very heterogeneous impacts on local labor market. To the best of our knowladge, this analysis is also the first one that tries to disentangle the mechanism behind the observed diverse labor market impacts. The research also shows that the temporal and spatial spillover effects are important factors contributing to the total labor market impacts. Creating proxies for land demand and supply by the principal component analysis (Wang and Rickman, 2017), we find that the heterogeneous impacts of different disasters are likely driven by different disaster-induced shifts in labor demand rather than shifts in supply. The anlaysis also shows that climate-related natural disasters can have very different impacts on local labor market. For instance, the impact of heat on employment and wage are both positive, Flooding and severe storms have significant positive impacts on employment while winter weather and drought have significant negative impacts on employment. None of their impacts on wage is significant. Wildfire has a positive impact on wage but not on employment. Except for drought, the estiamted impacts on wage for all other weather and climate disasters are positive. However, the socio-economic mechanisms that generates these local labor market responses remains puzzling. Why would local labor market respond differently to different types of climate-related disasters? Further exploration is necessary to understand these diverse impacts on local labor market and how these impacts are related to the characteristics of the natural disasters. A better understanding of these differences are critical for the development of disaster-preparedness program in order to improve the socio-economic resilience of local economy. This study will facilitate the discussion regarding the underlying socio-economic mechanisms causing the results.

ABSTRACT. Natural Disaster Special Session

ABSTRACT. Discussions surrounding the adverse community relations between people of color and police forces have been at the forefront of the news due to fatal incidents involving unarmed African-Americans. There are many issues that have created distrust and anger between these groups. One such issue is fatal police encounters. This paper examines the role of demographics on the prevalence of fatal police encounters involving people of color and whether there is spatial clustering with these encounters. Research has found the existence of spatial spillovers in the relationship between race and police expenditures (Ajilore, 2016).

ABSTRACT. In recent decades, American women's educational attainment has overtaken that of men, with more female students now enrolling in and graduating from college than males. While this is generally good for gender equality, and undoubtedly good for the millions of women who have gone on to earn better jobs and higher wages than would otherwise have been available to them, US counties whose educated populations are disproportionately female tend to be in worse shape economically than counties whose educated populations are more balanced. In other words, having large numbers of "missing men" in a county’s educated labor force appears to be associated with poorer economic outcomes. In this paper, I explore how gender disparities in higher education vary across the urban-rural continuum and, in the case of rural counties, investigate connections between "missing men" in the educated population and persistent natural resource dependence.

ABSTRACT. In this paper, we analyze the effect of women´s earnings on domestic violence in rural Colombia during the period 2009-2013. To this end, we build an indicator of domestic violence against women at the municipal level, based on the number of visits of women who attended health facilities where a report on suspected domestic violence was issued by their physician, which overcomes the bias introduced by self-reporting victims. Results indicate that greater income generation by women in rural areas in most economic activities (coffee, fruits, commerce, and industry) decreases domestic violence, while in services the opposite takes place. The latter could be the result of the mainly menial jobs women perform in this sector; which may be undervalued in their homes, thus making them more vulnerable. We also found that improvements in the economic activity of the municipality and improvements in the access to education contribute to the reduction of domestic violence against women.

ABSTRACT. The City-County consolidation has been used as an effective tool to promote urbanization in China in the last two decades. Previous studies suggest this policy promotes economic growth in the urban area. Yet, its effect on the surrounding non-urban area has not been investigated. Using both city-level and county-level data in China, we propose a Difference-in-Difference (DID) framework to examine the impact of such consolidation on the unconsolidated counties within the same prefectures. The control groups are selected according to propensity-score-matching (PSM). Such selection strategy provides us a good control group, which shows parallel pre-trend between two groups. We find that the consolidation leads to significant loss of GDP and population, as well as slower GDP and population growth in the unconsolidated counties within the same prefecture. Although the previous study found that this policy has fostered agglomeration in the urban core, we also show that there is no significant effect at prefecture-level. Therefore, such consolidation policy appears to just redistribute the economic benefits across the urban area and non-urban area, which exacerbates regional economic disparity.

ABSTRACT. Intergovernmental fiscal transfers for ensuring horizontal fiscal equity are well established in the federal systems. In the presence of significant regional disparities in India, the central government engages in large intergovernmental transfers to the poorer states for horizontal fiscal equalization. Despite this, the role of central government in addressing interstate fiscal disparities has been not measured comprehensively. Other than the intergovernmental transfers to state governments, the central government also directly spends on health, education, rural development, and various subsidies. All these central expenditures, bypassing the state budgets, have implications for regional redistribution and horizontal fiscal equalization. This paper prepares estimates on a long felt gap regarding the availability of data on central government’s transfers and spending at the state level. Using these estimates, we examine progressivity of multiple channels of central transfers and spending; and their impact on horizontal fiscal equalization in India.

ABSTRACT. Lucas (1987, updated in 2003) calculated the potential welfare gains to stabilization of business cycles to be surprisingly small. Welfare gain is measured by a compensation parameter which makes a household indifferent between a deterministic lifetime stream and a compensated, risky lifetime stream of consumption. Using a constant relative risk aversion utility function and a coefficient of risk aversion of one, Lucas calculated that the welfare gain in real per capita consumption is in the order of one-twentieth of 1 percent. This is equivalent to about $16.29 increase in real per capita consumption per year for 1947 – 2001. Subsequent research, e.g., Dolmas (1998), has shown that, using alternative specifications of individuals’ risk preferences and the stochastic processes for per capita consumption, the potential gains to business cycle stabilization lie somewhere between 1/10% and 23% of annual real per capita consumption. On the other hand, Otrok (2001) argued that the functional form of the preference functions and the consumption processes should not be arbitrary. Rather, the preferences should be able to reproduce the observed consumption process and other aggregate variables in a business cycle model. Using time-non-separable preferences, Otrok (2001) obtained estimates of welfare costs of business cycles much closer to those obtained by Lucas (1987, 2003). In this paper, we take the position of Lucas and Otrok that modifying empirically plausible preferences alone is unlikely to lead to large welfare costs of business cycles. We examine the welfare costs of business cycles for the 50 states using the same preference function as Lucas (1987, 2003). To our knowledge, this is the first paper that examines the welfare costs of business cycles at the state level. Our results support the findings of Lucas (1987, 2003) and Otrok (2001) that further welfare gains from stabilization of business cycles are very small, ranging from one-eighth of 1 percent for Wyoming to one-forty-fifth of 1 percent for Iowa. Preliminary results from further analysis also suggests that welfare costs of business cycles vary systematically across regions of the country.

ABSTRACT. The location quotient (LQ) is a widely used measure of regional industry concentration with the advantages of easy calculation and interpretation. If the LQ for an industry in a county is higher than a cut-off value, such as one, the local concentration level is said to be greater than the national level. However, a high LQ value may not necessarily imply a vibrant regional industry structure. For example, a small county with a single dominant industry may yield an extremely high value of the LQ for this industry. Moreover, LQs can only reflect industry concentration in a single county, but an industry often concentrates in a larger area covering several adjacent counties. In this paper, we construct three variants of LQ, namely ALQ, WLQ, and WALQ, that account for both co-agglomeration of related industries and spatial concentration in neighboring counties. Computed with an input-output matrix and a spatial weight matrix, ALQ measures the concentration of related industries in a county, WLQ measures the spatial concentration of an industry in neighboring counties, and WALQ measures the spatial concentration of related industries in neighboring counties. We compute the four variants with the imputed County Business Patterns for the 2-digit and 3-digit NAICS industries in the U.S. counties. The result shows that a county with an extremely high LQ is very likely to be low in ALQ, WLQ, and WALQ. Both Pearson and Spearman correlation coefficients among LQ and the three variants show that the overall correlation between LQ and ALQ is very low, while the correlations between LQ and WLQ and between WLQ and WALQ are relatively high, suggesting a strong pattern of co-agglomeration of related industries in neighboring counties. Moreover, the correlations vary by industry. Some industries even exhibit negative correlations, which is surprising given that the computation of the three variants is almost linear with respect to LQ. We further compute an aggregated measure of co-agglomeration with the four measures with the intention that the low and negative correlations between LQ and the variants may compromise the extreme value in LQ. The validity of the new measures is assessed with case comparisons and with various standardization methods for LQ. A simple application of new measures is provided to discuss the difference in industry co-agglomeration patterns between urban and rural counties.

ABSTRACT. We examine the determinants of the corporate income tax system when firms operate in multiple regions and regional governments use a formula apportionment (FA) system to allocate the firms' corporate income tax base across regions.

When a firm, in this case a multiregional corporation (MRC), has business activities in multiple regions, measuring income earned within each region raises a complicated conceptual and administrative problem. In the FA regime, the MRC's taxable income is determined using a formula that considers the company's capital, sales, and labor shares at each location. The present paper develops a theoretical framework that generalizes the analysis of Pinto (2007). In the present setup, a MRC has presence in two regions and regional governments strategically decide the weights in the formula. The MRC produces an homogeneous good in one or two regions and the good can be sold domestically or shipped to the subsidiary in the other region. Domestic prices are endogenously determined. We derive the decentralized FA systems and compare these outcomes to the centralized solutions.

Specifically, the paper characterizes several equilibria under alternative objective functions. It concludes that when governments choose the formulas that maximize domestic tax revenue, they will tend to implement formulas that weighs heavily the sales portion of the formula; when governments maximize the MRC’s net profits, they will end up choosing diametrically opposite formulas; and when they value consumers' well-being, they will adopt formulas that weighs more heavily capital shares.

The paper also shows that these formulas depart from those chosen cooperatively by the two regions. For instance, suppose that a central authority wants to choose the formulas that maximize total tax revenue paid by the MRC. Then, the paper shows that the formulas should be the same. If the goal is to maximize total consumer surplus, then it should induce regions to implement diametrically opposite formulas.

ABSTRACT. State and local governments and regional institutions are expending considerable resources to promote the expansion of cybersecurity employment. However, clear metrics for assessing outcomes from these initiatives have not yet been established. Further, existing investments in cybersecurity may provide certain regions with substantial advantages in the race to attract and develop cybersecurity firms and a cyber-capable workforce.

For this paper, we develop and analyze a county-level database on the institutional context of the cybersecurity industry, which includes university research expenditures on cybersecurity, federal cybersecurity grants and contracts, patents issued for cybersecurity applications, and employment in cybersecurity-related industries and occupations. We address two main questions:

1) What regions host significant concentrations of cybersecurity-related research, government spending, knowledge production, and employment?

2) What spatial relationships exist among these cybersecurity activity indicators?

ABSTRACT. The study of EE at country level is often examined within the boundary of a country’s own institutions, infrastructure, culture, and people, without considering major external influences from other countries or world power. Past literature in EE seldom discusses the relevance and importance of global geopolitical issues impacting a country’s path to EE building. Given the imbalance of world power among nations, in the study of developing economies and their EE, it is important to understand geopolitical issues and their impact on indigenous EE formation. This study examines the influence of U.S. historical foreign policies and U.S. funded activities that are relevant to the formation of EE in two countries in the MENA region - Egypt and Morocco. We use a historical lens to chronicle US-led formal and informal entrepreneurial activities within the two indigenous settings. Further, we use a process approach to trace the sequential development of EE in these two countries. The combination of a historical lens and a process approach in analysing these two countries shed light on the overall U.S. led external influence in the formation of EE in MENA region.

ABSTRACT. In the past two decades, Greater China Region has seen some of the most vibrant EE with companies such as Baidu, Alibaba, and Tencent (BAT) growing as large as Amazon, Facebook, and Google in the U.S. Another example is the emergence of successful entrepreneurial cities in China, e.g., Shenzhen specializing in IOT, has attracted world businesses. However, immediately across the border from Shenzhen, Hong Kong, a former British colony, has not faired quite as well with only one unicorn (i.e., GoGoVan) finally emerging in 2017. It is rather ironical given Hong Kong’s economic freedom (number one ranked by Heritage foundation) that its EE development has not grown in par with that of Mainland China. Another puzzle is Macau, a former Portuguese colony, has little to boast about its EE. The purpose of this paper is to evaluate the status of EE of Hong Kong and Macau in the past two decades within the context of the digital economy. In evaluating their statuses, we examine the co-evolution and the metamorphosis of political sovereignty and their impact on EE building in Hong Kong and Macau in the digital economy. We discuss the negative impact of political sovereignty changes (i.e., etic effect) that resulted in the lack of internal policy (i.e., emic effect) to prepare for entrepreneurship in the digital economy.

ABSTRACT. The two key components (institutions, agents) in an entrepreneurial ecosystem (EE) are interactive, but the long-term impact of institutions (e.g., legal structure) on agents (e.g., entrepreneurs) has not been examined. We are particularly interested in the impact of institutions that were established under colonial rule and their lag effect after colonial rule ended. One such example is the system of chaebol in South Korea which seems to be unable to stay out of the headline scandalous news these days. This fixation, chaebols, is a mirror of Japan’s zaibatsu system. The purpose of this paper is to examine the role these institutions, i.e., institutions established under Japanese colonialism (from 1910 to 1945), play in impacting South Korean agents. In other words, we use an etic approach to understand South Korea EE. Other than institutional endowment from colonial days, we further examine the cultural traits of Korean agents and compare their entrepreneurial traits to the Japanese, possibly explaining a divergence of EE development from that of Japan in current time. We conclude with the discussion of the complexity of high geopolitical uncertainty that may drive agents’ behaviour.

ABSTRACT. Romania’s 41 administrative counties and Bucharest, the municipality capital, have been shaping the country’s entrepreneurial business environment. Practitioners, experts, and academics agree both on the significant potential of the Romanian market and on the obstacles that have halted its expected progress over the past 27 years. However, each sub-region in Romania faces different obstacles to develop its EE. An interactive Entrepreneurial Map of Romania highlights eight target areas: Bucharest [over 115,000 companies], Timiș [over 24,000 companies], Cluj-Napoca [over 31,000 companies], Bihor [over 18,000 companies], Brașov [over 18,500 companies], Prahova [over 17,600 companies], Constanța [over 22,000 companies], and Iași [over 16,000 companies]. Obviously, each of these target area is laden with historical background with variation of factor endowments. Some are industrial towns, some are university towns, some are neighbours of former East European countries while others bordered with former Western European countries. Taken together, the richness of each region’s history and culture shapes their EE development. The purpose of this paper is to review seven counties and Bucharest municipality (together 8 areas) and their longitudinal EE formation. Specifically, we examine each region’s historical industry dominance, political orientation, human capital, and university presence to understand what kind of entrepreneurs are successful in these places and what kind of policies contribute or hinder their business endeavours. We analyse regional data of entrepreneurial activities, its regulations and taxes, financing, coordinated support, culture, and entrepreneurial education. Our results have managerial implications highlighting opportunities and challenges entrepreneurs face in Romania, and informing policy makers at the local, regional, and national levels.