Regional In-Commuting, Costs of Ozone Non-Attainment in Southeast Missouri Topics of Economics Conference

CAPE GIRARDEAU, Mo., April 22, 2009 — Two Southeast Missouri State University researchers recently conducted a regional labor flow study, examining in-commuting and its impact in Southeast Missouri counties.

The two, Dr. Bruce Domazlicky, director of the Center for Economic and Business Research, and Dr. Willie Redmond, associate professor of economics, presented their findings April 17 at the 10th Annual Economics Conference at Southeast. The conference is the showcase for economics research projects by faculty and students conducted throughout the year.   

“We found that the creation of jobs in a county is a benefit to a region, but it must be realized that some of those jobs are likely to be filled by people who live outside of the county,” Domazlicky said. “Depending on the type of industry involved, it could be anywhere from 10 percent to 40 percent of the jobs are filled by commuters from other counties.”

Domazlicky says these findings have a couple of implications, including that a regional approach to economic development is preferable to a single county approach. 

“Many of the benefits from job creation will spill over into other counties,” he said. 

Second, a county may decide to give implicit subsidies to prospective employers through tax breaks, he said. However, some of the benefits of those tax breaks will go to nonresidents in the form of jobs, Domazlicky said. So a county may want to consider the fact that some of the benefits of job creation from new employers may not accrue to its residents, but rather will go to nonresidents. 

“This may be an important consideration when the county is deciding on tax breaks and other subsidies,” he said.

Green and environmental regulations have become important to economic development efforts in the past year, particularly ozone regulation.  Cape Girardeau and Perry Counties are under scrutiny for non-attainment, according to Dr. William Weber, professor of economics. This means their ozone readings may be above the EPA standards, he said.

Weber conducted two studies, one of which examined the regulatory costs of ozone non-attainment in Southeast Missouri.  He says, “as economies grow they go through a transition where pollution intensive economic activity is often displaced by economic activity that is less pollution intensive.  This transition occurs because the environment and its amenities tend to be a luxury good that citizens demand more of as they grow richer.  Such demands often take the form of regulations restricting pollution, in this case, ozone.  I estimate that the lost income due to regulations that come with ozone non-attainment status are about 3.9 percent of personal income in the 293 U.S nonattainment counties.  In Cape Girardeau and Perry counties, those costs equal only 0.2 percent of personal income.”

Dr. Michael Devaney, professor of finance, examined the population aging of the region.  He determined that Missouri counties have a higher proportion of elderly than the United States as a whole.  Because of net out-migration and rural young and baby boom aging, most rural counties in the U.S. and Southeast Missouri are growing older, he said.

Devaney says that regional health care costs will be impacted by these trends because the cost of providing social services to rural elderly is more expensive than elderly living in metro areas.  Given population trends, the percentage of elderly living in one of the rural counties of southeast Missouri is on the increase and “could increase by 35 to 40 percent by the year 2020,” Devaney said.

The research conference gave students the opportunity to present research as well. Several student researchers had their work published in a Journal of Student Research.  One student worked in cooperation with economics professors on a study.  Chelsea Caile, a senior, helped with a study to determine how taxpayers spent their tax rebates in 2008 and whether tax rebates were a viable economic stimulus method.

Caile said of her experience, “This year’s conference was filled with relevant economic information pertaining to the southeast Missouri area.  I was happy to see it so well attended–by students and members of the community alike.  I was honored to have my work displayed among the research of other professors whom I admire so greatly.  After final revisions to our project this summer, the co-authors and I will begin looking for publication opportunities.”

The Center for Economic and Business Research (CEBR) hosts the conference.  The CEBR is a federally-designated University Center, receiving some support from the U.S. Department of Commerce – Economic Development Administration to provide expanded services in this very poor region of the nation.  The Missouri Research Corporation partners with CEBR on University Center projects and educational offerings. Domazlicky serves as the CEBR director.