Improving Economic Vitality in Rural Iowa: A Data-Based Approach

1. Improving Economic Vitality in Rural Iowa: A Data-Based Approach Committee of 82

2. Overview Three part analysis Measures of Economic Vitality Consider indicators of economic vitality in Iowa and surrounding states Statistical Analysis Identify factors that explain economic growth 1990-2001 Application of the results to improve understanding of economic vitality in rural Iowa

3. Measures of Economic Vitality An index was created by adding measures that are related to vitality Three Indicators of Economic Vitality for Iowa and Surrounding States Broad Definition Index Narrow Measure Index Growth Based Index

4. Measures of Economic Vitality Broad Definition (Iowa) Includes Effect on the Index Per capita income 2001 (+) Transfer payments per capita 2001 (-) Per capita retirement payments 2001 (-) Median housing value 2000 (+) Total wage 2001 (+) Per capita retail sales 2001 (+) Percent of population aged 65+ 2000 (-) Percent of population aged 20-34 2000 (+) Unemployment rate 2002 (-) Manufacturing wage 2001 (+) Percent of population with less than 4yrs high school 2000 (-) Crimes per capita 1995 (-) Government farm payments per farm proprietor 2001 (+) High school dropouts relative to enrollment,7-12, 02 � 03 (-) Limited English proficiency as percent of enrollment 02 -03 (+) Percent of graduates intending 4yr college 02 � 03 (+) Natural amenity scale (+) Primary care physicians per 10,000 2001 (+) Percent of population non-white 2000 (+)

5. Measures of Economic Vitality:Broad Definition Index

6. Measures of Economic Vitality Narrow Definition Includes Effect on Index Per capita income 2001 (+) Transfer payments per capita 2001 (-) Median housing value 2000 (+) Total wage 2001 (+) Per capita retail sales 2001 (+) Percent of population aged 65+ 2000 (-) Percent of population aged 20-34 2000 (+) Unemployment rate 2002 (-)

7. Measures of Economic Vitality:Narrow Definition Index

8. Measures of Economic Vitality Growth Based Index Includes Iowa Surrounding Population growth rate 1995-2001 (+) (+) Employment growth rate 1995-2001 (+) (+) Per capita personal income growth 1995-2001 (+) (+) Transfer payments per capita growth 1995-2001 (-) (-) Total county income growth 1995-2001 (+) (+) Non farm proprietor growth 1995-2001 (+) (+) Percent of population aged 65+ growth 1990-2000 (-) (-) Percent of population aged 20-34 growth 1990-2000 (+) (+) Per capita retail sales growth 1995-2001 (+) NA Median housing value growth 1990-2000 (+) NA Retail firm growth 1995-2001 (+) NA Building permit growth 1996-2000 (+) NA Unemployment rate growth 1995-2002 (-) NA

9. Measures of Economic Vitality: Growth Based Index

10. Economic Vitality in Surrounding States: Growth Based Index 1990-2001

11. Visual Analysis of the Results Iowa counties are somewhat average There is a crude �C� shaped pattern of poor growth to the north and west of Des Moines Counties in Nebraska and Kansas fare poorly, and the worst hit counties are agricultural Counties around major cities do well (see the Twin Cities) Natural amenities seem to matter (see Arrowhead region in Minnesota or Lake Area in Southern Missouri)

12. Regression Analysis A method to �explain� growth in total county income across counties and states Allows us to measure the contribution of each variable while controlling for the other variables that are included Data from Iowa and surrounding states We present the economic importance of each of the statistically important factors

13. Variable to Be Explained: Iowa Total County Income Growth 1990-2001

14. Change in Livestock Receipts: A 10% increase in livestock receipts associated with a 0.3% increase in growth

15. County Revenue from Local Sources: A 10% increase in local taxes associated with a 0.6% decrease in growth

16. A 10% increase in transfer payments per capita associated with a 0.6% decrease in growth

17. A 10% increase in the population aged 65+ associated with a 1.8% decrease in growth

18. A 10% increase in share of county income from farming (farm program payments) associated with a 0.8% decrease in growth

19. Suburban Effect: A 10% increase in those commuting 30+ minutes results in an increase of 0.5% in growth

20. Entrepreneurship: A 10% increase in non-farm proprietors per capita results in a 1% increase in growth

21. Metro Impact: counties surrounding a metro have 0.03% more growth

22. Recreational Amenities Index: A 10% increase in index associated with a 0.02% increase in growth

23. State Policies Surrounding state effects relative to Iowa (after controlling for all previous variables) Illinois - 0.06 % less growth Minnesota � 0.06% more growth South Dakota � 0.12 % more growth! Wisconsin � 0.05% more growth

24. Statistical Analysis

25. Alternative Model Model used is most robust model Alternative model for illustration Drops variables with no explanatory power Drops explanatory variables with strong interrelationships (e.g., transfers and pop > 65, population and urban dummy) Explains almost 70% of difference but has higher transfer payment impact

26. Alternative Analysis

27. Research Motivated by the Results Economics of local taxes, where is the hindrance and what can be done do eliminate it? How do current federal commodity policies harm agricultural counties? Is there any merit in a differentiated agriculture? How can we take advantage of Iowa�s comparative agricultural advantage in raising livestock while minimizing social costs? What state policies have helped Minnesota, South Dakota, and Wisconsin and have hurt Illinois? What can counties and state do to increase the number of non-farm sole-proprietor and are these actions cost efficient? What local amenities can drive growth? Is it feasible to develop Army Corps of Engineers lakes?