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1
Economic Prosperity in Kentucky:Energy, Environment, and Other Factors
Presentation to the 2014 Governor’s Conference on Energy and the Environment:
The Changing Landscapes in Kentucky
Michael Childress
Center for Business and Economic Research
University of Kentucky
October 7, 2014
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Where do people work?
3
What about all the coal jobs?
4
Mining Employment in the Wider Economic Context
5
How do we measure economic prosperity?
6
Another look at economic prosperity
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Keys to Prosperity
• State Growth Empirics: The Long-Run Determinants of State Income Growth (Federal Reserve Bank of Cleveland)
• Examined income changes from 1939 to 2004• Basic question—why do some states do better
than others?– Knowledge Stocks (educational achievement/patents)– Industry Structure
• Negative association with manufacturing and mining
– Other (e.g., climate, taxation, regulation)
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The “Brain Hubs” Phenomenon
• Individual factors, like educational attainment, are vital for economic prosperity
• But sometimes where you live is just as important as what you know
• UC Berkeley economist Enrico Moretti, The Geography of Jobs, writes about “brain hubs” or “innovation clusters”– Thick labor market for highly specialized innovation-
driven workers and support personnel—as well as a lot of “social interaction”
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How does this relate to us?
• Richard Florida– The quality of place matters to the economy
• What’s there (the natural and built environment)• Who’s there (the people)• What’s going on (what people are doing, our
relationship with the natural and built environments).
• The quality of Kentucky’s environment has important economic development implications
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The Importance of Education
15% 20% 25% 30% 35% 40% 45%$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
KY
Age 25 and Older with Bachelor’s or Higher (2012)
Per
Cap
ita
Per
son
al I
nco
me
(201
3)
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What about electricity prices?
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Energy consumed per GDP
13
Cheap Electricity and Economic Prosperity
2 4 6 8 10 12 14$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
KY
Industrial Customers, Average Retail Price (cents/kWh) (2012)
Per
Cap
ita
Per
son
al I
nco
me
(201
3)
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Does this mean that “cheap” energy isn’t important?
• No, it means is that “cheap” electricity is just one of many factors.
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Site Selection Factors
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What about all the coal jobs?
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Poverty Rates by County, 2011
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Transfer Payments by County, 2011
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A Long-Term Economic Challenge
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Bachelor’s Degree by County
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Broadband by County
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Michael Childressmichael.childress@uky.edu
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