Economic Growth in Washington: An Examination of Migration Response and a Test of Model Accuracy

Abstract

This study develops a regional econometric model to extend and complement input-output economic impact analysis. Following the tradition of “linking” econometric and input-output models, this work extends the previous linear econometric specification to a more accurate nonlinear form. It also extends previous specification of these models to address the issue of job creation and job capture by residents. The resulting empirical model is based on a cross-sectional econometric analysis of allWashington counties. The use of the estimated econometric model is illustrated with a real job growth scenario using the growth in jobs between 1990 and 1997 for each Washington county. The simultaneous equation model evaluated by examining how closely the estimated population variable tracks its actual values in 1997. The rootmean square (RMS) percent error for population was 5.46 percent. Most of the new jobs are captured by immigrants instead of county residents. However, the positive long-run effect of job growth on labor force participation remains, though its effect is small.