Progress 10/01/07 to 09/30/12
Outputs
OUTPUTS: Objective 1: First, research on child care assistance as a work support program was conducted using data from a longitudinal survey of low-income families in Minnesota. Econometric models of parents' joint decisions about child care and employment were estimated. Second, on-going research continued to analyze economic linkages across counties in Minnesota using data from the Census Bureau Longitudinal Employment Dynamics (LED) program. We expanded the analysis to compare significant workflows for low, middle and high wage workers in Minnesota. Significant dissemination activities for this objective over the entire project period include presentations at research conferences in 2009 (Agricultural and Applied Economics Association), 2010 (Southern Regional Science Association) and 2012 (Association for Public Policy and Management) and a web-based seminar presented to Minnesota Extension Educators in Community Vitality in 2009. Four research papers were prepared, with one published to date. Research results were also disseminated to a broader audience in the form of research briefs. A non-technical article describing the research results to a general audience is under review for publication by the Center on Urban and Regional Affairs. Objective 2: First, we completed a study of the impact of Minnesota's tax-free zone program, Job Opportunity Building Zones (JOBZ), on economic activity in non-metro counties and cities. We reported the results of the study at a professional conference, in an article in Economic Development Quarterly, and in a published interview in the Minneapolis Fed Gazette. Second, we completed a study of the tax policy and tax administration implications of itemizing deductions vs. matching subsidies of charitable contributions. We conducted an experiment to test the impact of matching rather than rebating contributions in a system with voluntary reporting of individual contributions. We reported the results of the study in a report to the Internal Revenue Service, at several professional conferences, and in an article in the National Tax Journal. Finally, we completed a study of taxpayers' willingness to accept increased burden (costs) of filing taxes in exchange for non-transparency of earnings to the tax authority (i.e., the opportunity to under-report earnings). We conducted a laboratory experiment to measure subjects' propensity to under-report earnings in a voluntary compliance system with a probability of being audited and a penalty for under-reporting. We also learned their distaste for compliance burden (costs) by measuring their willingness to pay for burden reduction. We then observed subjects' behavior when offered a choice between a low cost, high transparency compliance regime (automatic reporting) and one with high costs, but with an opportunity to under-report (self-reporting). We reported our results at several professional conferences and in a report to the IRS. PARTICIPANTS: Elizabeth Davis and Laura Kalambokidis are the co-principal investigators for the project. Dr.Davis and graduate student Melissa Whitler conducted research under the first project objective, and Dr. Kalambokidis and graduate students Tonya Hansen, David Bael, and Matt Bombyk worked on the second project objective. On the child care study, Dr. Davis' co-authors were A. Blasberg, K. Tout, N. Forry, C. Carlin, and T. Isner. On the tax compliance studies, Dr. Kalambokidis' co-authors were Dr. Marsha Blumenthal and Dr. Alex Turk. The Internal Revenue Service provided funding for the tax compliance studies. Partner institutions in the regional NE-1029 project include University of Arkansas, University of California-Berkeley, Colorado State University, University of Delaware, University of Georgia, University of Idaho, University of Kentucky, Michigan State University, University of Missouri, North Carolina State University, Oregon State University, Penn State University, Purdue University, Clemson University and Cornell University. TARGET AUDIENCES: Federal and Minnesota policy makers, Extension Educators in Minnesota, economic development professionals, and development officers in nonprofit organizations in Minnesota and elsewhere. PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.
Impacts
Objective 1: Using an econometric method to account for parents' joint decisions about child care and employment, we demonstrate that receiving a child care subsidy is associated with a sizeable increase in the likelihood that parents will be employed full time. Research on economic linkages across counties in Minnesota demonstrated the importance of accounting for the complexity of inter-county workforce flows when formulating economic development policy in non-metropolitan areas. The research on workforce flows also provides indicators of the economic vitality and potential for future economic growth of different areas. Objective 2: In our analysis of the JOBZ program, we found that businesses signing deals in 2004 and 2005 reported creating 3,382 jobs and investing $569 million, with the reported activity varying significantly across the state. The amount of jobs reportedly created is very small relative to Minnesota's total nonfarm, private employment. We found scant evidence of JOBZ's impact on county-level economic growth. In the charitable contributions experiment, we found that actual contributions under the match regime were significantly lower than with the rebate cases, while gross contributions (including the government match) were significantly higher. If that reduction were to completely offset the match, then one would expect gross contributions to be the same in both rebate and match regimes. However, our results suggest that the reduction in contributions is incomplete, so that the match-inclusive gross contributions tend to be higher than under a rebate. Regarding compliance, we found that higher audit probabilities are associated with both a lower incidence of non-compliance and smaller amounts of over-reporting. In the alternative reporting regimes experiment, we found that subjects were significantly less likely to choose the self-reporting regime as the audit rate increased. Subjects with higher propensities to under-report and who earned more income were significantly more likely to choose the self-reporting regime. Those with higher willingness to pay for burden reduction were significantly less likely to choose self-reporting. Conditional on having chosen the self-reporting regime, we found that both propensity to cheat and willingness to pay for burden reduction were significantly associated with greater under-reporting. Comparing the share of subjects who were noncompliant under the single regime and the dual-regime system, we found that the noncompliance rate was lower when subjects were offered a choice of regimes.
Publications
- Davis, E.E., Blasberg, A., Tout, K., Forry, N., Carlin, C., Isner, T. (2011). Minnesota child care choices: families' participation in the Child Care Assistance Program. Minneapolis, MN: Child Trends; University of Minnesota; Amherst H. Wilder Foundation.
- Davis, E.E., Whitler, M. (2013). County Workforce Flow Patterns for High versus Low Earners in Minnesota: Where Do They Go CURA Reporter, Center for Urban and Regional Affairs. (Pending)
- Blumenthal, Marsha, Laura Kalambokidis, and Alex Turk. (2012) Subsidizing Charitable Contributions with a Match Instead of a Deduction: What Happens to Donations and Compliance National Tax Journal 65, 1 (March 2012): 91-116.
- Kalambokidis, Laura, Alex Turk, and Marsha Blumenthal. (2013) Behavioral Experiments of Alternative Reporting Regimes: Transparency vs. Burden. Forthcoming in The IRS Research Bulletin: Proceedings of the 2012 IRS Research Conference, ed, Alan Plumley and Janice Hedemann, Washington, DC: U.S. Internal Revenue Service, 2013. (Pending)
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Progress 01/01/11 to 12/31/11
Outputs
OUTPUTS: Objective 1: Identify and analyze ongoing and potential changes in rural labor markets and the impacts of migration, commuting and workforce development policies on rural labor markets. For this objective we have analyzed different methods for measuring economic linkages across counties using data from the Census Bureau Longitudinal Employment Dynamics (LED) program. The data include counts of workers' primary job location and residence location at a detailed geographic level for Minnesota and bordering states. We expanded the analysis to look at significant workforce flows by wage level, comparing significant workflows for low, middle and high wage workers in Minnesota. We submitted one manuscript to a peer-reviewed journal and another to a research review publication aimed at a more general audience. Both are still in the review process. Objective 2: Investigate the changing organizational structure, tax policy, and fiscal standing of local governments and the impact of tax and/or expenditure limitations on local government fiscal stress and economic growth in rural areas. For this objective, we secured funding from the Internal Revenue Service for a new study of taxpayers' willingness to accept increased costs of filing taxes in exchange for non-transparency of earnings to the tax authority (i.e., the opportunity to under-report earnings). In spring 2012 we will conduct a related computer laboratory experiment, for which we have drafted the experimental design and begun computer programming. In 2008, we reported the completion of a study of the impact of Minnesota's tax-free zone program on economic activity in non-metro counties. To detect if our finding of scant program impact was driven by our choice of counties as the level of analysis, this year we repeated the analysis for non-metro cities. PARTICIPANTS: Elizabeth Davis and Laura Kalambokidis are the co-principal investigators for the project. Dr. Davis and graduate student Melissa Whitler are conducting research under the first project objective and Dr. Kalambokidis and graduate student Tonya Hansen are working on the second project objective. Partner institutions in the regional NE-1029 project include University of Arkansas, University of California-Berkeley, Colorado State University, University of Delaware, University of Georgia, University of Idaho, University of Kentucky, Michigan State University, University of Missouri, North Carolina State University, Oregon State University, Penn State University, Purdue University, Clemson University and Cornell University. TARGET AUDIENCES: Federal and Minnesota policy makers, Extension Educators in Minnesota, economic development professionals, executive directors and development officers for nonprofit organizations in Minnesota and elsewhere. PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.
Impacts
Obj.1: Using a modification of a recent method developed to identify significant workforce flows, we showed that the number and location of significant flows varied by earnings level, especially in Minnesota counties where there was more than one dominant outflow of workers. However, the pattern of employment linkages varied even more by the type of county (metropolitan, micropolitan and noncore). Our results emphasize the importance of accounting for economic ties between counties when formulating economic development policy. Obj 2: This year, the results of our tax-free zone study reached our target audience through presentations for the Minneapolis Federal Reserve Bank and the Twin Cities Research Group, a network of local applied social science professionals; interviews with reporters from the Minneapolis Star Tribune and Mother Jones; and a website video for the local nonprofit Minnesota 2020.
Publications
- No publications reported this period
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Progress 01/01/10 to 12/31/10
Outputs
OUTPUTS: Objective 1: Identify and analyze ongoing and potential changes in rural labor markets and the impacts of migration, commuting and workforce development policies on rural labor markets. For this objective we continue to analyze different methods for measuring economic linkages across counties using data from the Census Bureau Longitudinal Employment Dynamics (LED) program. The data include counts of workers' primary job location and residence location at a detailed geographic level for Minnesota and bordering states. This year we expanded the study to look at significant workforce flows by worker characteristics, including wage level, age and industry. We prepared two manuscripts for publication in peer-reviewed journals. Results were disseminated at the Southern Regional Science Association annual conference. Objective 2: Investigate the changing organizational structure, tax policy, and fiscal standing of local governments and the impact of tax and/or expenditure limitations on local government fiscal stress and economic growth in rural areas. For this objective, we began a new study of taxpayers' willingness to accept increased tax filing costs in exchange for non-transparency of earnings to the tax authority (i.e., the opportunity to under-report earnings). We are seeking funding for the project, which will involve a computer laboratory experiment, and have drafted the experimental design. We will conduct the experiment in 2011. PARTICIPANTS: Elizabeth Davis and Laura Kalambokidis are the co-principal investigators for the project. Dr. Davis is conducting research under the first project objective and Dr. Kalambokidis is working on the second project objective. Melissa Whitler and Suhyun Jung worked as Research Assistants on objective 1. Partner institutions in the regional NE-1029 project include University of Arkansas, University of California-Berkeley, Colorado State University, University of Delaware, University of Georgia, University of Idaho, University of Kentucky, Michigan State University, University of Missouri, North Carolina State University, Oregon State University, Penn State University, Purdue University, Clemson University and Cornell University. TARGET AUDIENCES: Federal and Minnesota policy makers, Extension Educators in Minnesota, economic development professionals, executive directors and development officers for nonprofit organizations in Minnesota and elsewhere. PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.
Impacts
Objective 1: We found that standard methods of determining commuting zones based on largest or proportional workforce flows understate the linkages between non-metropolitan counties in some cases. After comparing methods used by previous studies, we developed a more transparent method of identifying significant workforce flows that can be applied to other data sets. In the decomposition analysis, results show that short-run changes in employment in a county are associated mainly with changes in commuting flows and in labor force participation. Our results emphasis the importance of accounting for economic ties between counties when formulating economic development policy. Objective 2: In 2008, we reported the completion of a study of the impact of Minnesota's tax-free zone program on economic activity in non-metro counties. This year, the study's results reached our target audience in the 9th Federal Reserve District via the October 2010 issue of the Minneapolis Fed's publication, Fedgazette.
Publications
- Hansen, Tonya J., and Laura Kalambokidis. How Are Businesses Responding to Minnesota's Tax-Free Zone Program Economic Development Quarterly (May 2010) 24: 180-192
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Progress 01/01/09 to 12/31/09
Outputs
OUTPUTS: Objective 1: Identify and analyze ongoing and potential changes in rural labor markets and the impacts of migration, commuting and workforce development policies on rural labor markets. For this objective we conducted a study of different methods for measuring economic linkages across counties using data from the Census Bureau Longitudinal Employment Dynamics (LED) program. The data include counts of workers' primary job location and residence location at a detailed geographic level for Minnesota and bordering states. We compared five different methods for measuring the number of significant workforce flows between areas as well as comparing findings with alternative data sets. In a second study, we are using a decomposition method to separate the components of employment growth into commuting, labor force participation, migration, and unemployment responses. In this analysis, we compare results using the LED data with other data sources and different time periods. The use of the LED data allows decomposition into more detailed commuting responses than was usually possible in earlier studies of this kind. Results were disseminated in a seminar at the University of Minnesota, at the annual AAEA conference, and in a web-based presentation to Minnesota Extension Educators in Community Vitality. Objective 2: Investigate the changing organizational structure, tax policy, and fiscal standing of local governments and the impact of tax and/or expenditure limitations on local government fiscal stress and economic growth in rural areas. For this objective, we completed a study of the tax policy and tax administration implications of itemizing deductions vs. matching subsidies of charitable contributions. We conducted an experiment to test the impact of matching rather than rebating contributions in a system with voluntary reporting of individual contributions. Previous experimental designs have explored voluntary compliance and charitable giving, but never in the same experiment. Our experiment allowed for misreporting and random auditing of contributions, with overstatements subject to a penalty. With supplementary funding from the Internal Revenue Service, we conducted the experiment in spring 2009. PARTICIPANTS: Elizabeth Davis and Laura Kalambokidis are the co-principal investigators for the project. Dr. Davis is conducting research under the first project objective and Dr. Kalambokis is working on the second project objective. David Bael served as a Research Assistant for the project, focusing on objective 2. Melissa Whitler and Suhyun Jung worked as Research Assistants on objective 1. Partner institutions in the regional NE-1029 project include University of Arkansas, University of California-Berkeley, Colorado State University, University of Delaware, University of Georgia, University of Idaho, University of Kentucky, Michigan State University, University of Missouri, North Carolina State University, Oregon State University, Penn State University, Purdue University, Clemson University and Cornell University. TARGET AUDIENCES: Federal and Minnesota policy makers, Extension Educators in Minnesota, executive directors and development officers for nonprofit organizations in Minnesota and elsewhere, local economic development professionals. PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.
Impacts
Obj.1: We found that standard methods of determining commuting zones based on largest or proportional workforce flows understate the important linkages between some non-metropolitan counties. After comparing multiple methods for analyzing economic linkages, we found that no one method proved to be superior, but we demonstrate that using multiple measures helps to identify more clearly the patterns of linkages across counties. In the decomposition analysis, preliminary results show that short-run changes in employment in a county are associated mainly with changes in commuting flows and in labor force participation. Our results suggest the importance of accounting for economic ties between counties when formulating economic development policy. Regional variation in child care prices was found to be related to differences in family incomes, rents and wages, number of children and government policies. Objective 2: In the charitable contributions experiment, we found that actual contributions under the match regime were significantly lower than with the rebate cases, while gross contributions (including the government match) were significantly higher. If that reduction were to completely offset the match, then one would expect gross contributions to be the same in both rebate and match regimes. However, our results suggest that the reduction in contributions is incomplete, so that the match-inclusive gross contributions tend to be higher than under a rebate. Regarding compliance, we found that higher audit probabilities are associated with both a lower incidence of non-compliance and smaller amounts of over-reporting.
Publications
- Davis, Elizabeth E. And Li, NaiChia. (2009). Regional Variation in Child Care Prices: A Cross-State Analysis. Journal of Regional Analysis and Policy. 39(1): 40-54.
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Progress 01/01/08 to 12/31/08
Outputs
OUTPUTS: Objective 1: Identify and analyze ongoing and potential changes in rural labor markets and the impacts of migration, commuting and workforce development policies on rural labor markets. For this objective, we obtained five years (2002-2006) of newly released data from the Census Bureau Longitudinal Employment Dynamics (LED) data website. The downloaded data include counts of primary jobs and residence location at a detailed geographic level for Minnesota and bordering states. From these raw data we created analysis files containing county to county worker flows and calculated the number of significant commuting flows and measures of employment self-containment and housing self-containment for each county. These measures form the basis of the ongoing analysis of rural-urban linkages in Minnesota. The descriptive analysis examined changes in linkages between Minnesota counties in terms of commuting flows over the five years. Ongoing analysis is focused on examining regional linkages within Minnesota testing different definitions and measures. We also compared the LED data to other sources, including Bureau of Labor Statistics (BLS) and Bureau of Economic Activity (BEA) databases. In related studies of workforce policies, we examined regional variation in child care prices for the child care assistance program, which provides child care subsidies to working low-income families. We conducted econometric analysis of factors related to use of work support programs like child care subsidies in rural versus urban areas. Objective 2: Investigate the changing organizational structure, tax policy, and fiscal standing of local governments and the impact of tax and/or expenditure limitations on local government fiscal stress and economic growth in rural areas. For this objective, we completed a study of the impact of Minnesota's tax-free zone program, Job Opportunity Building Zones (JOBZ), on economic activity in non-metro counties. We added newly released data to the database of JOBZ agreements by county, and completed a preliminary multivariate analysis of the separate influences of several explanatory variables (including reported JOBZ-related investment, reported JOBZ-related employment, and other variables, on local economic growth, holding constant other factors that might influence growth. The results of this study were incorporated into an Extension program which the co-author, Tonya Hansen, delivered at the 2008 Annual Meeting of the American Agricultural Economics Association. Also for this objective, we began a study of the tax policy and tax administration implications of itemizing deductions vs. matching subsidies of charitable contributions. We designed an experiment to test the impact of matching rather than rebating contributions in a system with voluntary reporting of individual contributions. Previous experimental designs have explored voluntary compliance and charitable giving, but never in the same experiment. Our experiment will allow for misreporting and random auditing of contributions, with overstatements subject to a penalty. With supplementary funding from the Internal Revenue Service, we will conduct the experiment in 2009. PARTICIPANTS: Elizabeth Davis and Laura Kalambokidis are the co-principal investigators for the project. Dr. Davis is conducting research under the first project objective and Dr. Kalambokidis is working on the second objective. Tonya Hansen provided research assistance for the JOBZ project, was co-author of the JOBZ study, and presented the Extension program related to the study at the 2008 AAEA Annual Meeting. Melissa Whitler, a graduate student in Applied Economics, and the Minnesota Regional Extension Educators in Community Vitality are also key collaborators in this project. The Internal Revenue Service is providing supplementary funding for the charitable contributions study. Partner institutions in the regional NE-1029 project include University of Arkansas, University of California-Berkeley, Colorado State University, University of Delaware, University of Georgia, University of Idaho, University of Kentucky, Michigan State University, University of Missouri, North Carolina State University, Oregon State University, Penn State University, Purdue University, Clemson University and Cornell University. TARGET AUDIENCES: Federal and Minnesota policy makers, Regional Extension Educators in Minnesota (Community vitality), local economic development professionals and similar audiences in other states. PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.
Impacts
Obj.1: In the comparative analysis of different data sources, we found considerable differences between the LED counts of jobs, workers and commuters compared to other sources from the census, BLS and BEA. Some of the differences can be explained, but the patterns are not consistent. In the analysis of rural-urban differences in workforce policies, we found that families in more rural counties tended to use work supports like child care subsidies, food stamps and welfare less often or for shorter time periods than families in metropolitan and micropolitan counties. Regional variation in child care prices was found to be related to differences in family incomes, rents and wages, number of children and government policies. Obj. 2: In our analysis of the JOBZ program, we found that businesses signing deals in 2004 and 2005 reported creating 3,382 jobs and investing $569 million, with the reported activity varying significantly across the state. The amount of jobs reportedly created is very small relative to Minnesota's total nonfarm, private employment. We did not find evidence of JOBZ's impact on county-level economic growth.
Publications
- No publications reported this period
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Progress 01/01/07 to 12/31/07
Outputs
OUTPUTS: Objective 1: Identify and analyze ongoing and potential changes in rural labor markets and the impacts of migration, commuting, and workforce development policies on rural labor markets. For this objective, we obtained the newly-available Local Employment Dynamics (LED) data for Minnesota for 2002, 2003 and 2004, and completed preliminary analyses to understand the data patterns and limitations. We compared the LED data to the 2000 Census Journey-to-Work data, determining that the two data sources are not comparable. We analyzed data on self-employment by county in Minnesota to determine how many workers are not included in the LED database. We conducted a literature review on linkages and regional economies. This work provided the background needed to develop testable hypotheses with regard to commuting linkages and local economic dynamics. Objective 2: Investigate the changing organizational structure, tax policy, and fiscal standing of local governments and the impact of
tax and/or expenditure limitations on local government fiscal stress and economic growth in rural areas. For this objective, we have begun research on the impact of Minnesota's tax-free zone program, Job Opportunity Building Zones (JOBZ), on economic activity in non-metro counties. We have thoroughly reviewed the economic and regional science literature on location-specific tax incentives and inventoried available data sources on the JOBZ program. We created a database of JOBZ agreements by county, including new employment and investment that businesses report having made in fulfillment of their JOBZ agreements. Combining these data with county-level economic variables allowed us to do a preliminary analysis of the impact of JOBZ-related employment and investment on economic growth in the counties. We are now adding newly released data to the database, revising the paper, and investigating possible sources for firm-level employment and investment information. We presented our
preliminary JOBZ analysis to tax policy professionals in a paper titled, "How Did Businesses Respond to Minnesota's Tax-Free Zone Program," at the Annual Meeting of the National Tax Association in November 2007.
PARTICIPANTS: Elizabeth Davis and Laura Kalambokidis are the co-principal investigators for the project. Dr. Davis is conducting research under the first project objective and Dr. Kalambokis is working on the second project objective. Tonya J. Hansen served as a Research Assistant for the project, focusing on objective 2. Collaborators include a graduate student, Melissa Whitler at the University of Minnesota, and the Minnesota Regional Extension Educators in the area of Community Vitality. Partner institutions in the regional project NE-1029 include University of Arkansas, University of California-Berkeley, Colorado State University, University of Delaware, University of Georgia, Oregon State University, North Carolina State, Pennsylvania State, Purdue University, University of Kentucky, University of Idaho, University of Missouri, Michigan State, Clemson, and Cornell.
TARGET AUDIENCES: Federal and Minnesota policy makers, Regional Extension Educators in Minnesota (Community vitality), local economic development professionals and similar audiences in other states.
Impacts
The project has only been underway for three months so the impacts to date are limited. (Obj.1) Sharing what we have learned about the new LED data with collaborators on the project will contribute to the development of a common methodology and set of questions for researchers in several states. (Obj. 2) In our preliminary analysis of Minnesota's tax-free zone program, we found that businesses signing JOBZ agreements in 2004 reported creating 2,565 jobs and investing $460 million by the end of 2005. This reported activity varies significantly across the state, with one zone reporting investment of $136 million and another reporting less than $2 million. Similarly, the zone with the largest amount of reported job creation had 729 new jobs, and the zone with the least reported 34 new jobs. Our preliminary econometric analysis did not yield evidence of JOBZ's impact on county-level economic growth, although it may simply be too early, or our scale of analysis (counties)
too large to detect that impact. Our final results will inform state and local policymakers about the effectiveness of the JOBZ program.
Publications
- No publications reported this period
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