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1999 Kentucky
Annual Economic Report |
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Contents
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| Quarterly
Forecasts for the Kentucky Economy, 1999 - 2001 |
| Eric C. Thompson |
| The Kentucky economy is forecast to see
moderate growth from 1999 through 2001. During 1999, growth is expected to be slower for
Kentucky and the United States compared to past years. Real gross state product is
forecast to grow at a 2.4 percent rate in 1999, real total personal income is forecast to
grow about 1.5 percent in each quarter of 1999, and total population is forecast to grow
about 0.7 percent in 1999. Employment growth is forecast to average about 29,000 new jobs
each year from 1999 to 2001, with the services sector leading the way with about 14,000
new jobs each year. Retail trade employment growth is also forecast to be strong, adding
about 9,800 jobs in 1999, while manufacturing employment is forecast to increase by only
about 500 jobs in 1999. Strong growth in occupations is also forecast to occur in services
and marketing and sales occupations.
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| The U.S.
Economy in 1998: Uncharted Waters? |
| Christopher J. Waller |
| The year 1998 saw many macroeconomic
events not seen in more than two decades and in some cases not since the Great Depression.
While most of these events were ‘good,’ such as federal government surpluses,
low unemployment, near zero inflation, and solid growth of national income, 1998 also
produced a tremendous burst of volatility in asset markets, record trade deficits, and
perverse interest rate relationships. This has made the Federal Reserve’s job of
navigating the U.S. economy much more complicated and uncertain. While the outlook for
next year is murky, the economy should be able to avoid a recession and continue to grow
at a respectable rate, although probably at a lower rate than we have observed in the last
couple of years.
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| An Evaluation of the Kentucky Education Reform Act |
| William H. Hoyt |
| The Kentucky Education Reform Act (KERA)
caused drastic changes in the way education is provided in Kentucky. Because KERA
attempted to equalize funding and dramatically alter the curriculum and governance of
schools, it is appropriate to see how effective the reforms have been in affecting
spending and educational outcomes. Comparisons of measures before and after KERA show that
it has equalized funding among school districts, with some districts gaining substantially
in their funding of students. Teacher salaries and student/teacher ratios have also
improved relative to national averages since the introduction of KERA. Educational
outcomes have not improved, however. There has been no appreciable gain in test scores or
graduation rates in Kentucky relative to other states, and there is no evidence that KERA
has increased college attendance rates of Kentucky high school graduates.
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| Why Are More
Kentuckians Working? |
| Mark C. Berger and Sharon Kane |
| Kentucky’s female employment
increased substantially from 1986 to 1996, from 44.5 percent in 1986 to 52.8 percent in
1996, a larger increase than seen nationwide. At the same time, Kentucky’s male
employment rate decreased from 68.0 percent to 65.8 percent during this period, while the
U.S. rate stayed the same. The most important factor behind the increase in the female
employment rate has been the increase in education among Kentucky females from 1986 to
1996, as more education tends to lead to higher employment rates. Also important was the
change in industry structure and, to a lesser extent, growth in gross state product and a
decrease in average household size. The analysis is less clear for Kentucky males, but
nationwide male employment rates have been falling over time.
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| Market
Responses to Kentucky’s Health Insurance Reforms |
| Michael Clark and Ginny Wilson |
| Health insurance reforms in Kentucky in
1994, 1996, and 1998 dramatically changed the nature of health insurance in the state. One
part of the legislation limited the ability of insurance companies to charge different
premiums based upon individual characteristics such as age, gender, and health status.
Because all insured persons would then be charged an average premium based upon the
average health status of the entire group, those in better health may have opted to drop
their insurance because they would be paying a higher premium than otherwise. Legislation
passed by the General Assembly again allowed insurance companies to segment their
customers by health status but does not allow them to deny coverage to high-risk people.
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| Medicaid
Managed Care and the Tennessee Health Care Industry: Potential Implications For Kentucky |
| Eric C. Thompson, James H. Stoker, and
Dan A. Black |
| The 1998 Kentucky General Assembly
passed legislation creating a managed care program for Kentucky Medicaid recipients. In
1994, Tennessee introduced a managed care program for its Medicaid recipients called
TennCare. The Tennessee program expanded to cover thousands of additional patients without
a concurrent increase in medical expenditures. This overall increase in cost may cause
some counties to lose health care providers and facilities. TennCare appeared to cause a
modest reduction in the number of health care facilities in Tennessee counties located on
the border of the state. The analysis shows that about 1 in 34 border counties would have
one fewer establishment in each health care industry after TennCare, with losses more
likely to occur in counties with smaller populations. As Kentucky moves to a similar
managed care system, it seems that the effect of such a program on the number of health
care establishments is likely to be small.
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| Computer and
Internet Usage at Businesses in Kentucky |
| Steven N. Allen |
| Virtually all businesses in Kentucky use
computers in some way. Many businesses are also beginning to use the Internet as a
communications medium and sales and marketing platform for their goods and services.
Results of a recent survey of large Kentucky businesses show that almost 70 percent of
businesses use the Internet for electronic mail and information searches while smaller
numbers use it for marketing and promotion of products and online commerce. Kentucky
businesses also indicated that they place a good deal of importance on the computer skills
of prospective employees, even though many firms still provide computer and Internet
training to their employees. Finally, most businesses using the Internet consider it a
productive tool for their business.
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