An Analysis of Regional Economic Growth in the U.S. Midwest, April 2005

In this paper we examine some of the economic forces that underlie economic growth at the county level. In an effort to describe a much more comprehensive regional economic growth model, we address a variety of different growth hypotheses by introducing a large number of growth related variables. When formulating our hypotheses and specifying our growth model we make liberal use of GIS (geographical information systems) mapping software to “paint” a picture of where growth spots exist. Our empirical estimation indicates that amenities, state and local tax burdens, population, amount of primary agriculture activity, and demographics have important impacts on economic growth.

Industry Projections 2002 - 2012 Iowa Workforce Development Regions, 2002

Statewide and Regional projected industry employment 2002 - 2012

Iowa Workforce, Today and Tomorrow, 2004

Demographic and employment information are used by economic developers, market researchers, counselors and curriculum developers for educational institutions, academic researchers, government planners, and private businesses. Occupational information on employment and wages also provides guidance for students making their first career choices and older workers considering a change of profession. In the last decade, Iowans have grown older and more diverse. The median age (2000) stood at 36.6 years, with 38 counties recording a median age of 40 or above. In the last decade, Hispanics accounted for a third of Iowa’s population growth. The most highly educated Iowans were Asians, with 43 percent earning a minimum of a bachelor’s degree. The Iowa labor force has been growing erratically since 1980, but still reached a record 1,663,000 in 2002 before inching downward. In the next 25 years, the labor force will see dramatic changes with the impending retirement of the baby boom generation and the influx of new immigrants and younger college-educated workers. While Iowa nonfarm employment declined by 7,000 workers during 2003, it did show improvement in the second half of the year. In a prosperous year, the Iowa economy generates an average of 2,500 jobs per month. This number was negative during the recession and has been below average this year. National economic events will continue to have a strong impact on Iowa job growth. Occupations requiring higher education are among the higher-paying Iowa jobs. Computer software engineers, computer support specialists, and customer service representatives are expected to be among the faster-growing occupations. Also, the aging population will bring opportunities for workers in healthcare. Occupations requiring higher education are among the higher-paying Iowa

Lithuania’s Food Demand During Economic Transition, January 2000

The linear approximate version of the AIDS model is estimated using data from the Lithuanian household budget survey covering the period from July 1992 to December 1994. Price and real expenditure elasticities for twelve food groups were estimated based on the estimated coefficients of the model. Very little or nothing is known about the demand parameters of Lithuania and other former socialist countries, so the results are of intrinsic interest. Estimated expenditure elasticities were positive and statistically significant for all food groups while all own-price elasticities were negative and statistically significant, except for that of eggs which was insignificant. Results suggest that Lithuanian household consumption did respond to price and real income changes during their transition to a market-oriented economy.

What can the United States learn from Spain's Pork Sector? Implications from a Comparative Economic Analysis, September 2005

This study provides a comparative economic analysis of the primary production of pork and its marketing channel in Spain and the United States. The focus on Spain is due to the profound growth and transformation of its pork sector over the last 20 years, compared with other major players in the world market for pig meat. The analysis reveals a number of similar characteristics but also important differences between the two countries. The significant expansion of Spain’s pork production sector stemmed from a number of factors that apply, to a relatively large extent, to some U.S. states (in particular, North Carolina) but do not apply to the U.S. pork production sector as a whole. This implies that it is unlikely that the U.S. pork production sector as a whole will mimic an expansion driven by the same type of factors in the future. Likewise, it seems highly unlikely that the U.S. consumption of pig meat will expand in the future based on the same driving forces behind the sharp increase in Spain’s domestic demand for pig meat over the last 20 years. The analysis also indicates that Spanish pig producers are currently being subjected to more stringent environmental and animal welfare regulations than their U.S. counterparts and that these regulations are becoming increasingly more restrictive. It would not be surprising to see similar trends emerging in the United States, leading to a substantially more restrictive regulatory environment for U.S. hog producers.

Vertical Product Differentiation, Entry-Deterrence Strategies, and Entry Qualities, September 2005

We analyze the entry of a new product into a vertically differentiated market in which an entrant and an incumbent compete in prices. Here the entry-deterrence strategies of the incumbent firm rely on “limit qualities.” With a sequential choice of quality, a quality-dependent marginal production cost, and a fixed entry cost, we relate the entry-quality decision and the entry-deterrence strategies to the level of entry cost and the degree of consumer heterogeneity. Quality-dependent marginal production costs in the model entail the possibility of inferior-quality entry as well as an incumbent’s aggressive entry-deterrence strategies of increasing its quality level toward potential entry. Welfare evaluation confirms that social welfare is not necessarily improved when entry is encouraged rather than deterred.

Dairy Markets in Asia: An Overview of Recent Findings and Implications, September 2005

This paper is an overview of important findings regarding the ongoing evolution of Asian dairy markets based on a series of new economic investigations. These investigations provide systematic empirical foundations for assessing Asian dairy markets with their new consumption patterns, changing industries, and trade prospects under different domestic and trade policy regimes. The findings are drawn from four case studies (China, India, Japan, and Korea), as well as a prospective analysis of future regional patterns of consumption and a policy analysis of trade liberalization of Asian dairy markets. The overview distills the findings of these new investigations and integrates them in the earlier economic literature; it draws policy implications and identifies lessons for countries outside of Asia, especially for emerging exporters in Latin America.

2000 Summary Iowa Beef Cow Business Record, 2001

2000 Summary Iowa Beef Cow Business Record

Tariff Escalation and Invasive Species Risk, October 2005

We investigate the interface between trade and invasive species (IS) risk, focusing on the existing tariff escalation in agro-forestry product markets and its implication for IS risk. Tariff escalation in processed agro-forestry products exacerbates the risk of IS by biasing trade flows toward increased trade of primary commodity flows and against processed-product trade. We show that reducing tariff escalation by lowering the tariff on processed goods increases allocative efficiency and reduces the IS externality, a win-win situation. We also identify policy menus for trade reforms involving tariffs on both raw input and processed goods, leading to winwin situations.

Production and Abatement Distortions under Noisy Green Taxes, October 2005

Pigouvian taxes are typically imposed in situations where there is imperfect knowledge on the extent of damage caused by a producing firm. A regulator imposing imperfectly informed Pigouvian taxes may cause the firms that should (should not) produce to shut down (produce). In this paper we use a Bayesian information framework to identify optimal signal-conditioned taxes in the presence of such losses. The tax system involves reducing (increasing) taxes on firms identified as causing high (low) damage. Unfortunately, when an abatement decision has to be made, the tax system that minimizes production distortions also dampens the incentive to abate. In the absence of wrong-firm concerns, a regulator can solve the problem by not adjusting taxes for signal noise. When wrong-firm losses are a concern, the regulator has to trade off losses from distorted production incentives with losses from distorted abatement incentives. The most appropriate policy may involve a combination of instruments.

Inspection Intensity and Market Structure, October 2005

An investigation of financing an inspection policy while allowing the enforcement of a market regulation is described. A simple model shows that the intensity of controls depends on the market structure. Under a given number of firms, the per-firm probability of controls is lower than one, since firms’ incentive to comply with regulation holds under positive profits. In this case, a lump-sum tax is used for limiting distortions coming from financing with a fixed fee. Under free entry, the per-firm probability of controls is equal to one, and only a fixed fee that prevents excess entry is used to finance inspection.

Tariff Equivalent of Technical Barriers to Trade with Imperfect Substitution and Trade Costs, November 2005

The price-wedge method yields a tariff-equivalent estimate of technical barriers to trade (TBT). An extension of this method accounts for imperfect substitution between domestic and imported goods and incorporates recent findings on trade costs. We explore the sensitivity of this revamped TBT estimate to its key determinants (substitution elasticity, preference for home good, and trade cost). We use the augmented approach to investigate the ongoing US-Japan apple trade dispute and find that removing the Japanese TBT would yield limited export gains to the United States. We then draw policy implications of our findings.

On the Segregation of Genetically Modified, Conventional, and Organic Products in European Agriculture: A Multi-market Equilibrium Analysis, October 2005

Evaluating the possible benefits of the introduction of genetically modified (GM) crops must address the issue of consumer resistance as well as the complex regulation that has ensued. In the European Union (EU) this regulation envisions the “co-existence” of GM food with conventional and quality-enhanced products, mandates the labelling and traceability of GM products, and allows only a stringent adventitious presence of GM content in other products. All these elements are brought together within a partial equilibrium model of the EU agricultural food sector. The model comprises conventional, GM and organic food. Demand is modelled in a novel fashion, whereby organic and conventional products are treated as horizontally differentiated but GM products are vertically differentiated (weakly inferior) relative to conventional ones. Supply accounts explicitly for the land constraint at the sector level and for the need for additional resources to produce organic food. Model calibration and simulation allow insights into the qualitative and quantitative effects of the large-scale introduction of GM products in the EU market. We find that the introduction of GM food reduces overall EU welfare, mostly because of the associated need for costly segregation of non-GM products, but the producers of quality-enhanced products actually benefit.

Managing Quality under Heterogeneous Consumer Demand and Product Quality, October 2005

Based on accepted advances in the marketing, economics, consumer behavior, and satisfaction literatures, we develop a micro-foundations model of a firm that needs to manage the quality of a product that is inherently heterogeneous in the presence of varying customer tastes or expectations for quality. Our model blends elements of the returns to quality, customer lifetime value, and service profit chain approaches to marketing. The model is then used to explain several empirical results pertaining to the marketing literature by explicitly articulating the trade-offs between customer satisfaction and costs (including opportunity costs) of quality. In this environment firms will find it optimal to allow some customers to go unsatisfied. We show that the relationship between the expected number of repeated purchases by an individual customer is endogenous to the choice of quality by the firm, indicating that the number of purchases cannot be chosen freely to estimate a customer’s lifetime value.

Barriers to Employment, March 2001

During the last five years, Iowa has experienced a shortage of workers and will continue to feel the impact of a short labor supply. As the state prepares to reverse this trend of a declining population, attracting immigrants and refugees has great potential. In addition, released preliminary reports from the 2000 Census are reporting growth of the Latino population in several Iowa counties. This survey was conducted as a way to supplement the information collected about the Latino population by the State Public Policy Group in 1999, Snapshot in Time: A clear view of the importance, value and impacts of the Latino population in central Iowa. (Una Foto Actual de la Comunicad Latina: Un panoramaclaro de la importancia, del valor, y de los impactos de la población Latina en el área central de Iowa.) Although this survey was enlightening, it was broad in scope. It was the goal of the agency to collect more specific data regarding workforce needs and barriers that the Latino population encounter in the State of Iowa. Although it was the desire to broaden the scope of the previous survey, it should be noted that the survey samples were not identical. But it is recognized that because the Latino population within the state is small, some of the respondents could have participated in both surveys. We were also hoping to benefit from the extensive work conducted by SPPG within the community as a way to increase the response rate for this survey. This executive summary highlights some of the most significant findings from the survey of Latinos residing in Central Iowa. This analysis centers on the impact the Latino population can have in filling the labor shortages and how Iowa can best embrace the new Iowan. In addition, some of the key findings could offer insight into removing unnecessary barriers that prevent immigrants from utilizing valuable work skills as they integrate into the workforce. This information may be insightful to community leaders and employers who want to welcome new immigrants into their community. The following diagram collected from the 2000 Census illustrates the percentage of Latinos residing in the state.