Tài liệu The Determinants of Metropolitan Growth pdf

CU MIT Center for Real Estate Week 12: Real Estate and Regional Economic Growth ¢ Exports, transfers, investments and the determinants of regional growth: demand.. ¢ Population growth

CU) MIT Center for Real Estate

Week 12: Real Estate and Regional Economic Growth

¢ Exports, transfers, investments and the

determinants of regional growth: demand

¢ Population growth and migration: supply

¢ 3-Q model of regional response Factor

supply elasticity and the role of real estate

¢ Wages, productivity and real estate costs —

across MSAs.

MIT Center for Real Estate

Income and Product Accounts in States

Summary of Output and Income Accounts

for Florida and Pennsylvania, 1991

Florida ($ billions) Pennsylvania ($ billions) Income Accounts*

Output Accounts**

Profits and Rents (1) 93 84

CU) MIT Center for Real Estate

Regional Accounts: Flow of Funds

¢ Regions do not have to have individually balanced

accounts Surpluses in goods can be balanced by deficits in capital or government flows: the following cross border

flows however must sum to zero

Gov surplus (Federal): G-T [spending — taxes]

¢ Notice the in Florida, huge trade deficit is made up with huge negative savings

j MT Center for Real Estate

Sources of Regional Demand

e Some variables are determined directly by the size of a

state’s economy (Income or Output) : imports (M), Federal Taxes (T), consumption or savings (S) and profits earned

in the state (70)

e Other variables are determined by forces largely outside of the region and serve to bring money into the state,

generating growth and ultimately determining state size (level of income or output):

- Exports (X)

- Investment (1)

- Federal spending (G)

- Unearned income: SS, retirement (y)

j MT Center íor Real Estate

Characterizing Export growth and Investment?

den, = DeN + dXe(N-N) + Le(n-N,)

Shift

(1): industry

n,e: regional growth in activity, level of activity N: national growth of activity

e Share: a matter of timing

e Mix: Historic industrial structure

¢ Competitive: ‘our’? companies versus “‘theirs’’ [innovation —vs- production costs: “‘product cycle]

E MIT Center for Real Estate

Study of impact of each Demand factor on the Boston Area Economy over time (Coulson)

Competitive effect

Share effect

~e

~ ~ - ~.~ -

~~ em

= -

—

~~ -

0 1 2 3 4 yearssincestart 8 9 10 II

CU) MIT Center for Real Estate

Regional Supply shifts are as important

¢ Migration into a region that results from

factors in the origin and not destination

[US history 1820-1920]

e Birth rates in the state — 20 years earlier!

(Mass —vs- California Net Reproduction

Rates)

¢ Recent immigration from Mexico and Asia.

E MIT Center for Real Estate

Equilibrium in a Market

region’s product, labor C=0,R + a,pW <<

1 Product

3 Wages equilibrate

2 Costs = average of Ww

labor demand

R

(proportional to Real Estate

4 Rents do the same

in structures market

Kp=0,Q

j MT Center for Real Estate

P

Changes in Regional Output

output, prices, wages Market

and rents in reaction to C=04,R + OW

shift in product demand

Qd to Qd’

1) Prices (and costs)

W/P

must rise Ditto output

Labor wp’

2) Wages and Market |‡ ”?*

and stock of structures

shifts Real Estate | p> a Ks

changes?

j MT Center for Real Estate

Changes to Regional 6 P

utput

product, wages and Market | C=0KR + ,W

rents from shift in

labor supply to L’

1) Wages must fall

as employment rises

2) Costs must fall W/P

4) What % of the

labor shift 1s

j MT Center for Real Estate

Recent Examples of Demand and Supply induced

erowth

Regional Differences in Labor and Wage Growth, 1960-1990

Employment

Population (% Total (% Manufacturing ( % Wages™ (%

Metropolitan Area* Change) Change) Change) Change)

* 1960 figures based on 1960 Census Bureau MSA definitions; 1990 figures based on 1990 Census Bureau definitions

**Real average hourly earnings of production workers in manufacturing, 1990 dollars

adapted from DiPasquale and Wheaton (1996)

j MT Center for Real Estate

In the Long run:

rents will be negatively

correlated across areas

2) If they vary

wages and rents are

positively correlated

Regional Land Rents

CU) MIT Center for Real Estate

Median House Metropolitan Area Actual Wage** Skill-Adjusted Wage** Value*** Cost of living index* in many countries

Anaheim 11.22 11.09 237,184.00 132.30 ?

Boston 11.88 11.31 200,000.00 164.10 e eye

Buffalo 9.34 9.50 78,614.00 107.20 pe 5 ste t pos t ve

e@

Cincinnati 10.19 10.00 78,745.00 102.40 correlations

Cleveland 10.36 10.16 83,855.00 109.50

Dallas 10.62 10.44 85,000.00 103.80 between wages Denver 10.89 10.35 86,335.00 101.50 and housin rents

Ft Worth 10.33 9.96 80,000.00 103.20 S ° Indianapolis 9.62 9.61 78,614.00 99.30

+

Kansas City 10.69 10.22 71,155.00 95.10 1969 doliars

Los Angeles 10.90 10.83 225,000.00 126.50 **calculated by multiplying wage

Miami 9.43 9.75 94,874.00 110.10 differential indices by Dec 1989 -

Minneapolis 11.22 11.10 95,000.00 99.80 on private, nonaagricultural payrolls New Orleans 9.42 9.45 68,309.00 97.80 *** Brom American Housing Survey

Portland, OR 10.34 10.19 80,643.00 103.00

*From 3Q 1989, except Boston (3Q88), San Francisco 12.62 11.94 250,000.00 144.50 Cincinatti and San Jose (4Q89), and

Tampa 9.07 8.97 85,000.00 100.70 adapted from DiPasquale and Wheaton

Washington, DC 11.97 11.22 170,000.00 128.40 (1996)

Average 10.58 10.31 120,954.00 112.60