Wednesday, June 27, 2012

The Economic Performance of Florida & Its Metro Areas

Recently, I published a study based on research presented at the Florida Economic Symposium in April.  I should note that this doesn't involve sophisticated econometrics, but presents an analysis of the performance of the economies of the major metropolitan areas (MSAs) in Florida over the last decade (click here for the complete study).  Here's the abstract:

"From the highs of the housing bubble to the lows of the Great Recession, the Florida economy experienced significant change during the first decade of the twenty first century.  This study explores the performance of the state and its major MSAs both in terms of economic growth and employment.  In order to explore the relative competitiveness of each area, dynamic shift-share analysis was used to isolate the effects of national growth, industrial composition, and regional competitiveness in explaining the performance of each area’s employment growth.  While the industrial structure had a small positive impact on job growth for Florida and its metropolitan areas, regional competitiveness differed noticeably.  Once one removes the effects of industrial structure and national growth, most areas exhibited positive competitive effects, led by Orlando and Jacksonville.  Only Tampa had a negative competitive position.  Though a detailed analysis is beyond the scope of this study, the primary factor found to help explain the relative competitiveness of each area was its skills ratio: the ratio of adults with college degrees to those without a high school diploma, which showed a correlation of 0.61 with competitiveness.  This suggests at least a two-fold strategy for promoting job creation: strengthening efforts to increase high school graduation rates while also increasing the number of college graduates."

Besides the conclusions stated in the abstract, there's interesting information regarding the change in the composition of jobs in each metropolitan area, Florida, and the US.  It's no surprise that the sectors losing the most jobs tended to be manufacturing, construction, and information services, while the big winner was education and health services (employment in "leisure and hospitality" and "professional and business services" experienced rapid growth in certain MSAs).

When it comes to explaining the relative economic performance of the MSAs, several factors were considered, but the one that had the most impact was education, both at the top end (those completing college) and the bottom (those lacking a high school diploma).  Efforts to address educational outcomes at both levels is the key to addressing employment over time.  Of course this is no surprise since if adults have more human capital (based in part on their education), they'll be more employable.  Locations with more adults who are employable will also experience more rapd job creation.  How do we increase high school and college graduation rates?  That's easier said than done.  It involves more than just increasing spending on education.  It's also impacted by the home life of students, how education is delivered, and other factors as well.  Whether one considers a city, state, or nation, in order to generate more jobs, including high quality jobs, it first needs to create a high quality workforce.