An analysis of a regional economy using an adjusted income variable. Case study: Nassau-Suffolk, New York

The research of this dissertation is to develop an income measure of local/regional economic activity. The measure is an economic variable that reflects regional differences in Value Added Per Employee (VAPE). Vape within a local economy is reflected in income earned in the locality. Income earned by persons working in the locality must be adjusted to understand the total of income received by its residents. Such adjustment must account for net commuter income, that is, adding the "earned" income of residents who work elsewhere and subtracting the "earned" income of nonresident persons who work in the locality. To the adjusted income variable was the inclusion of commuter income. Collectively they account for economic activity in the local/regional center. To evaluate the statistical significance of adjusted income variable, an analysis of a regional economy was undertaken using both adjusted and unadjusted income. In addition, a simple static econometric model was constructed for the Nassau-Suffolk region of New York State.;The importance of building an urban/regional model from the bottom up is that national models attempting to describe regional economies from the top down diminish in accuracy as the urban/regional center gets geographically local. The approach developed in this dissertation captures the local economy.;This study will accomplish the follow: (1) develop a statistical methodology to address the criticism of Knight's income variable by adjusting income to reflect regional differences in VAPE; (2) construct an urban/regional model by using the adjusted income to measure economic activity in the region; (3) the commuter activity of the region is accounted for by adding a commuter income variable; (4) test the model by applying it to the Nassau/Suffolk area of New York State; (5) estimate regional requirements for basic and non-basic industries of the region; (6) estimate a set of demand equations for industries or sectors specified; and (7) interpret the result of the model's output to understand the dynamics of the region's growth.