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How (not) to Estimate GDP at the Sub-State Level: The Usefulness of the Economic Census

Author

Listed:
  • José G Caraballo-Cueto

    (University of Puerto Rico at Cayey)

Abstract

An accurate estimation of GDP for sub-state divisions is needed for studies on the overall size and growth of smaller economies, assessment of the industrial composition by subdivisions, and the impact of economic policies, among other reasons. In this paper, I review two popular methods to infer GDP in counties, both of which rely heavily on payroll, without controlling for labor productivity differences between subdivisions. By considering labor productivity heterogeneity across counties, I propose a new methodology that appears to provide a better map of the GDP of counties. For forecasting, my approach uses payroll statistics, but to a lesser extent. The new method is tested with data from Puerto Rico, a suitable jurisdiction given its significant heterogeneity between counties. I am able to map changes in economic geography associated with changes in the state’s economic structure. Like many other jurisdictions, Puerto Rico has undergone a deindustrialization process that ended up concentrating GDP in one geographical cluster.

Suggested Citation

  • José G Caraballo-Cueto, 2017. "How (not) to Estimate GDP at the Sub-State Level: The Usefulness of the Economic Census," The Review of Regional Studies, Southern Regional Science Association, vol. 47(3), pages 289-308, Fall.
    • Handle: RePEc:rre:publsh:v47:y:2017:i:3:p:289-308
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    References listed on IDEAS

    as
    1. Richard B. Andrews, 1954. "Mechanics of the Urban Economic Base: The Problem of Base Area Delimitation," Land Economics, University of Wisconsin Press, vol. 30(4), pages 309-319.
    2. Richard B. Andrews, 1954. "Mechanics of the Urban Economic Base: Special Problems of Base Identification," Land Economics, University of Wisconsin Press, vol. 30(3), pages 260-269.
    3. Harry Grubert & Joel Slemrod, 1998. "The Effect Of Taxes On Investment And Income Shifting To Puerto Rico," The Review of Economics and Statistics, MIT Press, vol. 80(3), pages 365-373, August.
    4. Richard B. Andrews, 1954. "Mechanics of the Urban Economic Base: General Problems of Base Identification," Land Economics, University of Wisconsin Press, vol. 30(2), pages 164-172.
    5. Richard B. Andrews, 1954. "Mechanics of the Urban Economic Base: The Problem of Base Measurement," Land Economics, University of Wisconsin Press, vol. 30(1), pages 52-60.
    6. Michael Lahr, 2001. "Reconciling Domestication Techniques, the Notion of Re-exports and Some Comments on Regional Accounting," Economic Systems Research, Taylor & Francis Journals, vol. 13(2), pages 165-179.
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    Keywords

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    JEL classification:

    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location
    • O2 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy

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