Applied Regional

Research in REAL
Geoffrey J.D. Hewings
Director,
Regional Economics Applications Laboratory
217.333.4740 (244.9339 fax)

hewings@illinois.edu

Celebrating 25 years of quality research 1989-2014

Preliminary findings
Why Per Capita Income declining?

Preliminary findings
Migration patterns US-Chicago relatively stable
but continued net loss
As Partridge et al. (2010) have shown, volume
migration in US has decreased since 2002

Preliminary findings
Chicago MSA net loss $23 billion dollars in terms of
family income in 16 years. This means $1.45 billion
income per year.

Preliminary findings
Inflow from RUS has lower than those outmigrating:
Selection bias? Yes.
People who move longer distance (both move in
and move out) are earning more than people
who are not moving or moving in short distance.
Does Chicago make people more productive over
time?
Possible stage of life selection bias are inmigrants younger (recent college graduates) and
out-migrants more experienced?

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Dynamics of change
Stylized facts
Every year,
86-88% people stay in the same house as last
year
Every year, around 7-9% people change their
household locations within a region
5% move in or out
Region loses 0.3-0.6% people through net
outflows

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ACS 2005-2009: Analysis by

Education

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Education levels and Flows

High
School

College
Graduates

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Age and Flows

Dominate
net inflow

Start of
Net
outflow
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Modeling Framework

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Progress
Current Progress
Disaggregated households by age, income
Generated consumption profiles
Migration separated into in- and out Developed industry*occupation matrices
Forecasts 2010-2040
Use micro-simulation to map age, education,
occupation and income characteristics onto
Stayers
In-migrants
Out-migrants

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Future Work
Micro-simulation will be used to model location
choices of
In-migrants
Existing residents changing houses
This will provide micro-spatial basis of population
and employment change that will be integrated with
macro model to explore interaction of macro
changes with growth in 300 communities within
Chicago region
Preliminary analysis suggests problems
accommodating population increases

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Proposed Macro-to-micro Link

Macro Community..Micro-simulation
(LEAM)
30 m square cells
Expected Employment
Growth
Intra-regional-level
Employment

National Economy
Final Demand
(F)

Output

Dynamic IO

Land Use
Population (P)

Employment (E)

Income (Y)

Intra-regional-level
Population

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Comparison of Constrained and

Unconstrained Population growth

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Comparison of Constrained and

Unconstrained Employment growth

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Polarization vs. Neo-Classical Growth Theory:

Can the Convergence Model be the Judge?
Chenxi Yu (PhD student Urban & Regional Planning)
How could the business cycle affect the convergence rate?
Assumption: Different income elasticities of product demand
for wealthier regions and for poorer regions in Good and Bad
economy.

When the economy

is booming, the
gap between the
wealthier and the
poorer regions is
increasing.

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Preliminary result with OLS

estimation
-convergence rate
9.84%

6.17%
1.32%
1973-1980

1980-1984

1984-1990

3.26%
1990-1994

0.65%
-0.09%
1994-2001
2001-2006

Convergence rate is the highest during energy crisis

period
The recession-recovery periods are higher than
normal growth periods
Convergence rate is declining over time

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Endogenous Growth of Ageing Economy:

Evidence and Policy Measures
Tae-Jeong Kim (Ph.D. Economics)

What is the effect of ageing population on regional

economy? What kind of public policy should be
implemented to mitigate the negative effects of ageing
phenomenon?
This paper employs two-sector economic model which
was mainly explored by Uzawa (1965) and Lucas
(1988) within the overlapping generation (OLG)
framework to reflect the dynamic optimization process
and its consequences of each generations.

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Results
Population ageing will lower the economic growth of Illinois
However, investment in human capital offsets significantly the
negative effects of ageing population.
Growth of Per-capita Output
2.00%

One-sector model
Two-sector model

1.50%

1.00%

0.50%

0.00%
2001

2006

2011

2016

2021

2026

2031

2036

2041

2046

-0.50%

-1.00%

This paper also measures the effectiveness of government

policies for mitigating the negative effects of ageing
phenomenon: the tax policy which encourages for individuals to
invest more time in education works best in the long-run.

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Economic Impact Analysis of 1993 and 2008 Flood in

the State of Illinois
Jun Wan (PhD urban & regional planning)
Analysis of Income Per Capita by County

Migration Analysis by County

In-Migration; Out-Migration, Net-Migration
Employment Analysis by County
A stochastic, time-series ARIMA model
Analyze the dynamics of changes, variation and
interpretations in the flood-affected counties
economy through time series data

Analysis of Income per Capita by County After the Hit of

1993 Great Midwestern Flood in Illinois
Yearly Percentage Change in Per Capita Income
6.00
5.00
4.00
3.00
% Change

Regional, state and local

economies were resilient to
the flood
Short-run: negative
economic impacts on
personal income
Long-run: local economies
might bounce back and
sometimes could even do
better than before

2.00
1.00
0.00
-1.00

1992

1993

1994

1995

1996

Alexander

Union

1997

-2.00
-3.00
-4.00
Year
Illinois State

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ARIMA Analysis of Net-migration Rates in Illinois

Counties after 1993 Great Midwestern Flood
County

ARIMA

AR(1)

AR(2)

MA(1)

MA(2)

Intercept

Short-Run

Long-Run

Alexander

ARIMA(1,0,0)

-0.682

--

--

--

-0.083

-1.290

0.537

Brown

ARIMA(1,0,0)

-0.773

--

--

--

0.088

-0.219

-0.531

Calhoun

ARIMA(0,0,1)

--

--

-1.000

--

0.074

-5.777

1.597

Cass

ARIMA(1,0,0)

-0.502

--

--

--

-0.104

1.262

-0.232

Greene

ARIMA(1,0,0)

-0.556

--

--

--

-0.029

0.820

-0.155

Jackson

ARIMA(1,0,0)

-0.674

--

--

--

-0.067

-0.886

0.132

Jersey

ARIMA(0,0,0)

--

--

--

--

0.003

0.606

0.197

Madison

ARIMA(0,0,1)

--

--

-1.000

--

0.059

-2.855

0.778

Monroe

ARIMA(0,0,1)

--

--

-1.000

--

0.044

0.266

-0.035

Morgan

ARIMA(1,0,0)

-0.415

--

--

--

-0.023

-0.095

0.073

Pike

ARIMA(0,0,2)

--

--

-1.918

1.000

-0.092

-0.066

0.127

Randolph

ARIMA(1,0,0)

-0.763

--

--

--

0.214

2.650

-1.175

St. Clair

ARIMA(2,0,0)

-0.786

-0.419

--

--

0.082

-4.266

0.832

Scott

ARIMA(0,0,1)

--

--

--

-1.000

-0.005

3.377

-1.101

Union

ARIMA(1,0,0)

-0.298

--

--

--

-0.093

-1.720

0.311

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ARIMA Analysis of Employment in Illinois Counties

after 2008 Flood
Flood Effects

Employment
May 2008

Percentage Decrease %

Winnebago

-498.8214

137443

0.362929651

Lake

-1296.534

339376

0.382034675

Whiteside

-48.5357

21224

0.228683095

Rock Island

-274.3571

80427

0.341125617

Mercer

-5.4286

3197

0.16980294

Henderson

-14.886

1126

1.322024867

Hancock

-26.2168

5016

0.522663477

Adams

-210.7143

34480

0.61112036

Jersey

-85.7015

5190

1.65128131

Calhoun

1.1071

893

-0.123975364

Douglas

-24.7143

7294

0.338830546

Edgar

-33.5714

6700

0.501065672

Coles

150.1429

24758

-0.606441958

Cumberland

-24.5357

2371

1.034824968

Jasper

-36.0376

2447

1.472725787

Clark

-39.7857

4966

0.801161901

Crawford

4.2289

7314

-0.057819251

Lawrence

-46.2512

4775

0.968611518

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ARIMA Analysis of Migration Rates and Employment in

Illinois Counties after 1993 Flood
Short-run and Long-run Impact of Flood on Migration Rates
and Employment are Analyzed by ARIMA model
Most local displacement or migration due to flood tends to be
temporary, but may become permanent, particularly if the
disaster permanently alters or destroys a local economic base.
The flood is likely to force people from their homes in the
small heavily damaged counties. In the long run, there were
either no effects or possibly positive effects on population.
Counties with small economic sizes tend to suffer a higher
level of negative flood effects than counties with large
economic sizes which could recover easily with abundant
capital and labor sources.

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GHG emissions embodied in international trade

(Intercountry-interindustry framework)
Norihiko Yamano (OECD and PhD student Urban & Regional Planning)

Japan
(Steel)
(Machinery)

Monetary
Trade, CO2

Import contents
of exports

China
(Plastic products)
Emissions from
Transport sect.

Australia
(Coal)

UK
Final consumption
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USA
Final consumption

Harmonized I-O Database

EU25: Eurostat

Cyprus, Romania
Non-OECD EU

Czech Rep., Slovak

Rep., Poland,
Hungary
EU15

Switzerland, Norway

Brazil, India, Russia

Argentina, Israel, S.Africa

Japan, Korea, USA

China, Indonesia, Singapore,

Chinese Taipei

Malaysia, Philippines,

Thailand

Target
countries in
this study

Australia, Canada, Mexico,

New Zealand, Turkey

Asian-US 10: JETRO-IDE

Iceland
Rest of World

OECD countries

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Carbon footprint: direct emissions factor vs carbon

embodied in final goods
Food products (ISIC 15)
1

1.4

Embodied

Machinery & metal

products (ISIC28-33)

Direct

0.9

1.5

0.8

1.3

0.7
0.6
0.5

Embodied

Direct

1.1
0.9

0.4

0.7

0.3

0.5

0.2

0.3

0.1

0.1

2.3

-0.1

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Summary
Other projects:
Supply chain impacts of Minority SBEs
Alternative uses of coal to generate energy (clean coal, gasification,
coal to oil)
Empirical challenges to the NEG (using Chinese interregional flow
data)
Interstate trade
Economic interdependence in a metro region
Melting the iceberg transport margins in CGE models
Comparison of Walrasian and Marshallian CGE models on same
data base
Continuous time econometric-IO modeling
Evaluation of urban revitalization in Turkey (Deniz Ay)
Labor force dynamics in Guatemala (KrugmanBlanchflower/Oswald-Harris/Todaro-Mortenson/Pissarides)
Matching indicators to develop new housing price index (Esteban
Lopez)

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Regional Economics Applications

Laboratory
University of Illinois
www.real.illinois.edu
25 years of Quality Research 1989-2014

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