economic pressure points
Post on 13-Sep-2014
523 views
DESCRIPTION
Economic Pressure Points - What Matters for Growth? A presentation by the Utah Legislative Fiscal Analyst.TRANSCRIPT
Pressure Points for Economic Development
Tax BurdenWork Ethic/
Religion/Culture/
ReputationNatural
Resources/Land/
GeologyProperty rights/Gov’t
stability
Business Incentives
Weather
Regulations/LicensingEnergy
Costs/Commodity
Prices
Human Capital/
Entrepreneurship/
Productivity
Geographic Location
Industry Effects/
Clustering/Critical Mass/Technology
Wage Inflation/Relative
Wage Levels
Demographics
Interest rates/
currency strength/Inflation
Infrastructure
Thomas Young, Ph.D.Andrea Wilko, Ph.D.
Steven AllredAngela Oh
Economic Pressure Points – What Matters for Growth?
Outline
The Background Influential Factors
a. Current measuresb. Potential measures/Partial influencec. External forces
Growth Measures RelationshipsRegression ResultsConclusions
BACK
GRO
UN
DE
ST. W
EA
LTH
BY
STA
TE
Background: International Wealth
ECONOMIC GROWTH FACTORSINFLUENTIAL FACTORSCURRENT MEASURES
TAX PO
LICY: TOTAL STATE TAX
(2012)
TAX PO
LICY: INCO
ME TAX
(2012)
TAX PO
LICY: SALES TAX
(2012)
TAX PO
LICY: C
ORP
ORA
TE TAX
(2012)
TAX PO
LICY: SEV
ERAN
CE TAX
(2012)
REGULATIONS AN
D LICE
NSING
REGLATIONS AN
D LICE
NSING
GOVE
RNMEN
T EM
PLOYM
ENT
REGLATIONS AN
D LICE
NSING
GOVE
RNMEN
T EM
PLOYM
ENT
BUSINESS INCE
NTIVE
S
BUSINESS INCE
NTIVE
S
ECONOMIC GROWTH FACTORSINFLUENTIAL FACTORSPOTENTIAL MEASURESPARTIAL INFLUENCE
WAG
E LEVE
LS (2
012)
WAGE INFLATION
EDUCA
TION
ENTR
EPRE
NEU
RSHIP
ENTR
EPRE
NEU
RSHIP
BUSINESS BIRT
HS LESS DE
ATHS
HOUSING COSTS
INDU
STRY
EFFECT
S/CLUSTER
ING
UTAH CLUSTER
:AER
OSPAC
E AN
D AV
IATION
INDU
STRY
EFFECT
S/CLUSTER
ING
UTAH CLUSTER
: AER
OSPAC
E AN
D DE
FENSE
INDU
STRY
EFFECT
S/CLUSTER
ING
UTAH CLUSTER
: FINAN
CIAL
SERV
ICES
INDU
STRY
EFFECT
S/CLUSTER
ING
UTAH CLUSTER
: LIFE SCIENCES
INDU
STRY
EFFECT
S/CLUSTER
ING
UTAH CLUSTER
: LIFE SCIENCES
INDU
STRY
EFFECT
S/CLUSTER
ING
UTAH CLUSTER
: INFO
RMATION
TECH
NOLO
GY
INDU
STRY
EFFECT
S/CLUSTER
ING
UTAH CLUSTER
: OUTD
OOR
PRODU
CTS & RECRE
ATION
INDU
STRY
EFFECT
S/CLUSTER
ING
UTAH CLUSTER
: ENER
GY AND
NATURA
L RE
SOURC
ES
INDU
STRY
EFFECT
S/CLUSTER
ING
UTAH CLUSTER
: ENER
GY AND
NATURA
L RE
SOURC
ES
ECONOMIC GROWTH FACTORSINFLUENTIAL FACTORSEXTERNAL INFLUENCE
PRODU
CTIVITY
Source: The Conference Board
GLO
BAL DE
MOGRA
PHICS • More than 50% of the world now lives in an
urban location and may grow to 70% by 2050• More than 50% of the world’s population lives within 200km of a coastline
• About half of all nations have birth rates below replacement levels
• Of all kids born today, around 50% will celebrate their 100th birthday
• Baby boomers are retiring and their parents are still alive. First time ever to have multiple generations of retired households
Source: ISI; Census; various international agencies
DEMOGRA
PHICS
DEMOGRA
PHICS
DEMOGRA
PHICS
DEMOGRA
PHICS
DEMOGRA
PHICS
DEMOGRA
PHICS
WEATH
ER: A
VG. TEM
PERA
TURE
ENER
GY COSTS/CO
MMODITY
PRICES
OIL
ENER
GY COSTS/CO
MMODITY
PRICES
NATURA
L GAS
NATURA
L RE
SOURC
ES/LAN
DCO
AL
NATURA
L RE
SOURC
ES/LAN
DMETAL
MINING
NATURA
L RE
SOURC
ES/LAN
DNONMETAL
MINING
OTHER AREAS THAT MATTER
• Property rights (divorce law; bankruptcy law; corporation law)
• Licensing regulations;• Work ethic/religion/culture;• Geographic location;• Currency strength;• Inflation;• Interest rates;• Technology • Infrastructure
ECONOMIC GROWTHMEASURES
PERSONAL
INCO
ME PER
HOUSEHO
LD
EMPLOYMENT GROWTH SINCE 1939
RELATIONSHIP BETWEEN FACTORS AND ECONOMIC GROWTH
TAX PO
LICY: TOTAL STATE TAX
TAX PO
LICY: INCO
ME TAX
TAX PO
LICY: SALES TAX
TAX PO
LICY: C
ORP
ORA
TE TAX
TAX PO
LICY: SEV
ERAN
CE TAX
WEATH
ER: A
VG. TEM
PERA
TURE
RELATIVE
WAG
E LEVE
LS
WAG
E INFLATION
REGULATIONS AN
D LICE
NSING
REGLATIONS AN
D LICE
NSING
GOVE
RNMEN
T EM
PLOYM
ENT
ENTR
EPRE
NEU
RSHIP
EDUCA
TION
HOUSING COSTS
DEMOGRA
PHICS
DEMOGRA
PHICS
DEMOGRA
PHICS
BUSINESS INCE
NTIVE
S
DYNAMIC PANEL, PROBIT REGRESSION RESULTS
PANEL REGRESSION RESULTS
• Income tax per household: 0.0001316 (every dollar increase in income tax per household is correlated with a 0.0001316 increase in the unemployment rate) (70% confidence) (a $200 million income tax increase equates to a change in unemployment from 5.0 to 5.03);
• Sales tax per household: 0.0005725 (every dollar increase in sales tax per household is correlated with a 0.0005725 increase in the unemployment rate) (80% confidence) (comparative figure XXXXX);
• Corporate tax per household results are inconsistent
PANEL/LOGIT REGRESSION RESULTS
• Regulatory rank: 0.0466484 (every rank increase in regulatory burden equates to a 0.047 increase in the unemployment rate) (99% confidence) (if Utah dropped from 7th or 8th best to 10th, then the unemployment rate correlated with that change would be from 5.0 to 5.08);
• Government employment per household: 4.65824 (every percent increase in government employment per household would equate to a 4.66 increase in the unemployment rate (80% confidence) (please note coefficient is too high);
• Depending on the regression format, educational attainment may or may not be associated with the an increased or decreased unemployment rate
Pressure Points for Economic Development
Tax BurdenWork Ethic/
Religion/Culture/
ReputationNatural
Resources/Land/
GeologyProperty rights/Gov’t
stability
Business Incentives
Weather
Regulations/LicensingEnergy
Costs/Commodity
Prices
Human Capital/
Entrepreneurship/
Productivity
Geographic Location
Industry Effects/
Clustering/Critical Mass/Technology
Wage Inflation/Relative
Wage Levels
Demographics
Interest rates/
currency strength/Inflation
Infrastructure
Thomas Young, Ph.D.Steven Allred
Andrea Wilko, Ph.D.
Economic Pressure Points – What Matters for Growth?