TESTING SIZE-DENSITY RELATIONSHIPS WITHOUT RATIO-VARIABLES,MULTICOLLINEARITY, LOGARITHMIC TRANSFORMATIONS,OR REGRESSION ANALYSIS*

Using data describing the historical distribution of county seats in the United States, we (1) replicate the traditional ratio-variable test of the size-density law, (2) test a new multivariate, nonratio form of the law, and (3) introduce an alternative method of testing, one which avoids three possible problems in traditional analyses: ratio-variables, multicollinearity, and logarithmic transformation.     

The determinants of county growth

The determinants of population and employment growth were explored from a broader interregional (as opposed to intraregional) perspective. Data for the 1970s, at the county level of disaggregation, were used to analyze the effects of economic, demographic, and climatic variables on population and employment growth in a simultaneous equation framework. The use of data from the more than 3000 US counties provides a considerably larger testing ground than those used in previous research. The point of departure was a conventional, general equilibrium model in which both households and producers are geographically mobile. The study's dependent variables refer to population, total, and manufacturing employment densities. Family income had a powerful effect in stimulating both population and employment density. A 10% increase in family income led to a 7.9% increase in total and a 9.2% increase in manufacturing employment densities. High family income must stand for high demand, and thus, firms are drawn to an area. High family income also drew households to an area. A 10% increase in family income led to a 5.5% increase in population density. High family income must represent "good" neighborhoods for households. High family income was positively correlated with population and employment density, but in other recent studies either a negative and significant relationship or an insignificant relationship were reported. Local taxes consist of the receipts of county government and those of municipalities, townships, school districts, and special districts within the county. The elasticities reported in Table 4 suggest that a 10% increase in such taxes resulted in about a 0.072% reduction in county population density during the decade. The Industrial Revenue Bonds (IRBs) and the percent of the labor force that is unionized are 2 potential policy instruments at the state level. The study results suggest that IRBs have not stimulated either manufacturing or total employment, and the coefficients were statistically insignificant in the structural equations. The elasticities imply that a 10% increase in percent union reduces total employment by 0.42% and manufacturing employment by 0.18%. The effect on population was tiny. Further, while not intended, the interstate highway program may have been a significant redistributor of population and employment but has not caused immigration of people and jobs from central cities.     

INTERREGIONAL ARBITRAGE AND THE SUPPLY OF LOANABLE FUNDS: A MODEL OF INTERMEDIATE FINANCIAL CAPITAL MOBILITY*

ABSTRACT This paper develops a model of regional financial markets which can encompass different degrees of spatial financial integration. The behavior of the system is analyzed under alternative assumptions about the time frame of analysis and the extent of the flexibility of interest rates. It is argued that links may exist between regional real and financial sectors even in the short run and that such links must, through the regional balance of payments, exist in the long run, even where there is perfect financial spatial integration. It is observed that these relationships have generally been ignored by regional economic model builders.