|
2007 Kentucky Annual
Economic Report
|
|
Full Document
(1.1 mb) |
The Adobe Acrobat Reader is used to view and print PDF
files.
It is free and can be down loaded from Adobe Systems
World Wide Web Site
|
|
Contents
Abstracts and PDF (click the icon) version of individual
articles.
|
Why is Kentucky so Poor?
A Look at the Factors Affecting Cross-State Differences in Income |
| Kenneth Sanford &
Kenneth Troske |
|
Kentucky has long been one of the poorest
states in the country. In order to change this fact we need to first
understand what factors can explain cross-state differences in income. In
this paper we focus on four factors: differences in the stock of knowledge
in a state; differences in the business climate in the state; state-level
differences in infrastructure; and differences in the industrial structure
in the state. We find that the most important factor determining wealth is a
state’s stock of knowledge—the education level of its residents and the
amount of innovative activity that occurs in the state. State
infra-structure is also an important determinant as is the industrial
structure of the state, although to a lesser degree. Cross-state differences
in business climate do not account for any of the cross-state differences in
income. These results show that if policy makers in Kentucky want to
increase income in Kentucky they need to focus on ways to increase the stock
of knowledge in the Commonwealth.
(169 kb)
|
|
|
Local Government Finance in Kentucky: Time for Reform? |
| David E. Wildasin |
|
This is a time of increased interest in local government finance in
Kentucky, as evidenced by the creation of a Task Force on Local Taxation,
established by the General Assembly. The final report of the Task Force
offers significant recommendations, including an amendment of the state
constitution that would provide the General Assembly with the flexibility to
institute new sources of local revenues. The present paper reviews the
status of local government finance in Kentucky and discusses some of the key
findings and recommendations of the Task Force. As the Task Force report
clearly recognizes, informed analysis of local tax policy in Kentucky is
hampered by inadequate data on local government finances. This paper
identifies some of these deficiencies, as well as a number of important
policy issues that require further policy analysis, particularly if the
General Assembly entertains significant reforms of local taxation.
(172 kb)
|
|
|
Differences in State and Local Government Spending between Kentucky and its
Neighbors: How Much and Why? |
| William Hoyt |
|
Politicians, citizen watchdogs
groups, the media, and voters all frequently express concerns about state
and local government spending, particularly if they feel tax dollars are
being wasted. While the measurement of government "waste" is beyond the
scope of this study, I offer some comparisons of government spending by
function between Kentucky and its neighboring states. I find that our
spending, on a per capita basis, is generally within the range of our
neighbors. In addition, I also examine how spending on a per capita basis
varies with some of the characteristics of the states. I find that per
capita state and local government spending in Kentucky is higher than the
average of these states because of its smaller population, more centralized
spending, and large number of local governments. However, its lower average
wages and demographics act to reduce its predicted spending.
(143 kb)
|
|
|
The Minimum Wage and Kentucky’s Working Poor: Low Hours or Low Wages? |
| Kenneth R. Troske and
Aaron Yelowitz |
|
Many policymakers in Kentucky have suggested raising the
state’s minimum wage as a way to help poor families. In this report, we
examine which Kentucky workers would be helped and hurt by a $7 minimum wage
in Kentucky. The results indicate that both the poor families, which the
minimum wage increase is intended to help, and the state as a whole would
be, if anything, less well off if the wage was raised. We investigate the
earned income tax credit as an alternate method of assisting poor families
and find it to be less disruptive and more likely to assist the targeted
recipients.
(149 kb)
|
|
|
The U.S. Economy in 2006: Mixed Signals |
| Jenny Minier |
|
The U.S. economy grew at a moderate pace in
2006, despite slowdowns in the housing market and manufacturing industries.
Strengths included stock market gains and low unemployment. In this article,
I discuss the economic events of 2006 and their implications for 2007. I am
cautiously optimistic that the economy will continue to grow at moderate
rates into 2007.
(106 kb)
|
Recent Economic Developments
in the United States and Kentucky:
Implications for 2007 |
|
Christopher Jepsen |
|
This article summarizes recent economic
developments in the United States and in Kentucky. It covers the substantial
growth in GDP over the last few years. The article also looks at labor
market conditions, prices including energy prices, monetary policy, and
housing conditions. Economic conditions in Kentucky are also discussed. The
article concludes with forecasts for both the nation and Kentucky. The
national economy is expected to grow by more than 2.0% in 2007, compared to
growth in Kentucky of slightly less than 2.0%.
(138 kb)
|
|
AIK Business Manufacturing Confidence Survey |
| Vladyslav Sushko and
Anna Laura Stewart |
|
The Kentucky Manufacturing
Business Confidence Survey is produced each year through the joint efforts
of the Associated Industries of Kentucky and the Center for Business and
Economic Research. The survey asks businesses to report on their actual
performance over the past year and to make predictions for the next year in
areas such as employment, sales, profits, capital expenditures, and industry
production. Among other findings, the 2006 survey reveals that growth
remains strong but that inflation may be distorting business expectations
regarding future profits and capital expenditures. In 2006 hiring conditions
were slightly higher than in 2005, and have come a step closer to the robust
sales conditions. Both reported sales and hiring conditions are at their
highest since the survey began in 1999. Future expectations in the
manufacturing sector also indicate that Kentucky manufacturers view their
business conditions more favorably than those of the entire industry. A
substantial presence in the number of businesses that do not expect
additional growth in the next 12 months suggests that business conditions in
the Kentucky manufacturing sector are unlikely to improve any further during
2007.
(159 kb)
|
|
|
|