Geographic After-Tax Real Income Differentials and Population Growth Rates

Article excerpt

The purpose of this brief note is to empirically investigate the impact of geographic after-tax real income differentials on geographic population growth rate differentials. The focus is on population growth rates in Florida's 67 counties over the period 1980-88. The reason for this focus is the availability of geographically comparable living-cost indices for all of Florida's counties. These data permit one to convert after-tax income (by county) into real terms. Such living-cost data are not currently available for any other state.

The after-tax real income in county j, R.sub.j, is defined as R.sub.j= (Y.sub.j-T.sub.j)/C.sub.j, Y.sub.j = county j's 1984 per capita income; T.sub.j = per capita local taxes paid in county j in 1984; and C.sub.j = the cost of living index for county j for 1984.

To examine the impact of g. on geographic population growth rate differentials in Florida, estimate the following reduced-form equation:

P.sub.j = a.sub.o + a.sub.1, R.sub.j + a.sub.2. CST.sub.j, + a.sub.3 A.sub.j

+ a.sub.4 D.sub.j + a.sub.5 U.sub.j + a.sub.6 URB.sub.j + [micro], (1)

where: P.sub.j = the percent change in county j's total population, 1980-88; a.sub.o = constant term; R.sub.j = per capita after-tax real income in county j in 1984; CST.sub.j = a binary dummy variable indicating whether county j lies on the coast (the Atlantic Ocean or the Guff of Mexico), with CST. …