This article analyzes the relationship between local economic growth and the distribution of businesses across size categories. The distribution is measured by the employment share in businesses of various sizes and by a business distribution index. The index provides a measure of the extent to which the local economy deviates from an equal employment share in each of nine business-size categories. The authors find strong links between a county's business-size distribution and its economic growth rate and also a difference between the optimal income and job growth-enhancing distributions. In addition, the results indicate that the optimal growth-enhancing distribution of employment has a higher share of the smallest businesses (with one to four employees) than the current average. The results support increased policy emphasis on encouraging small business start-ups and development; however, the optimal development strategy depends on the initial distribution of businesses within a local economy.
Price and yield uncertainty are traditional considerations in agricultural markets and their impact on development. Agricultural producers in transition economies face an additional risk factorchanges in the institutional protection of property rights. This paper illustrates how institutional uncertainty may affect investment, land use, and crop mix patterns. In particular, in the Ukrainian example, the rights of tenants are viewed as uncertain in anticipation of establishment of an open market for sale of agricultural land. Establishment of the land market in Ukraine has been postponed several times over the last fifteen years and a significant number of lease contracts are not formalized. A large panel of farm-level data was used to show that a higher share of rented land is associated with a lower share of land used for investment intensive perennial crops controlling for prices and other factors. The difference in response to uncertainty is found to be significant among three crop types: perennials, grains and oil crops. The implication is that the lower level of protection of use rights and uncertainty regarding the future regulation of land sales market leads to under-investments in more capital intensive crops. As a result, tenants deviate from the optimal crop mix, reducing the productivity of tenant farms.Farms under 200 ha are affected the most negatively as they are less likely to be able to access the level of legal and political protection enjoyed by large farms. As a result, Ukraine faces significant losses in the value of agricultural production and GDP in the short and longer run.
The coincidence of productivity improvements and growth of agriholdings in Ukraine over the last decade is often interpreted as evidence of technology-induced increasing returns to scale and superiority of very large farms. Panel data for the country's commercial farms in 2001-2012 do not allow us to reject the hypothesis of constant returns to scale but point toward the importance of farms and rayon-(district) fixed effects. This suggests productivity growth was driven by exit of unproductive and entry of more efficient farms. Higher initial shares of area under farms above 3,000 or 5,000 ha at rayon level significantly reduce subsequent exit, pointing towards one channel through which land concentration may reduce productivity growth.JEL classification: Q10, Q12, Q15, Q18, L10
A conceptual framework for climate change assessments of international market systems that involve long-term investments is proposed. The framework is a hybrid of dynamic and static modeling. Dynamic modeling is used for those system components for which temporally continuous modeling is possible, while fixed time slices are used for other system components where it can be assumed that underlying assumptions are held constant within the time slices but allowed to vary between slices. An important component of the framework is the assessment of the "metauncertainty" arising from the structural uncertainties of a linked sequence of climate, production, trade and decision-making models. The impetus for proposing the framework is the paucity of industry-wide assessments for market systems with multiple production regions and long-term capital investments that are vulnerable to climate variations and change, especially climate extremes. The proposed framework is pragmatic, eschewing the ideal for the tractable. Even so, numerous implementation challenges are expected, which are illustrated using an example industry. The conceptual framework is offered as a starting point for further discussions of strategies and approaches for climate change impact, vulnerability and adaptation assessments for international market systems.
We analyze the impact of economic development policies and highway infrastructure improvements on growth of per capita income and jobs in Michigan counties. The policies considered for analysis have significant impact on growth outcomes. However, this effect is non-linear. Significant heterogeneity in policy effects is also detected. The impacts are different with respect to average income level in a county as well as between metropolitan and non-metropolitan areas. In addition, cross-policy effects are found. We use improved measurement of policy treatment while accounting for possible spillover effects.
This article assesses the effect of labor demand and labor supply conditions on distribution of poverty across small communities in Michigan. The poverty model used for the analysis is based on the production behavior of the communities' residents, and is estimated using Census 2000 data. The difference in regional poverty rates is explained primarily by variation in the quality and quantity of communities' labor supply. Significant differences among rural, metropolitan, and metropolitan-adjacent communities are detected in determinants of poverty. In particular, a weak labor demand contributes to higher rates of rural poverty. Moreover, poverty rates are more persistent in rural areas and small towns. A higher average age of labor force is associated with a decrease in poverty rates. However, this effect becomes evident only after the ages of thirty-five to thirty-seven in rural areas, implying a slower accumulation of experience than in urban areas. Results imply that urban and rural poverty should be treated with area-specific policies that accommodate the difference in sources of poverty.
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