The Relationship Between Economic Growth And Its Determinants Essay

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The relationship between economic growth and its determinants has been examined extensively. One important issue is whether population leads to employment changes or employment leads to population changes (do ‘jobs follow people’ or ‘people follow jobs’?) To explain this interdependence between household residential choices and firm location choices, a simultaneous equations model was initially developed by Carlino and Mills (1987). This modeling framework has also been applied in various studies to investigate the interdependence between migration and employment growth or migration, employment growth, and income jointly determined by regional variables such as natural amenities (Clark and Murphy, 1996; Deller, 2001; Waltert et al., 2011), public land policy (Duffy-Deno, 1997, 1998; Eichman et al., 2010; Lewis et al., 2002, Lewis et al., 2003; Lundgren, 2009), and land development (Carruthers and Mulligan, 2007). In the Carlino-Mills (1987) model, the assumption is that households and firms are spatially mobile. Also, it is assumed that households migrate to maximize their utility from the consumption of private goods and services and use of non-market goods (amenities) and firms locate to maximize their profit whose production costs and revenues depend on business conditions, local public services, markets, and supply of inputs. In addition, these assumptions indicate that interdependence between employment and household income exists because household migrate if they
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