A comparison of two alternative models of economic impact: A case study of the Mississippi Nissan plant
This dissertation uses two methods to estimate the regional employment impact of a large production plant: input-output analysis and a relative employment density model. Input-output analysis projects the total number of jobs created, both direct and auxiliary, by an economic event. The problem with this method is that it does not account for possible job displacement. A job is displaced when a worker fills a new position and the vacated job remains vacant or is eliminated entirely. Thus, input-output analysis overstates the regional employment impact of a new production facility. In contrast, the relative employment density model estimates net employment and explicitly takes job displacement into account.
As an illustrative case study, this dissertation analyzes the regional employment impact of Nissan North America, Inc.'s automobile production facility in Canton, Mississippi, built in 2001. The State of Mississippi spent $425 million, plus incentives, to entice Nissan to locate in Canton. This public expenditure was based on the expectation that the plant would create as many as 30,000 jobs in Mississippi.
The results of the relative employment density model show that input-output analysis overstates the employment impact by thousands of jobs. The density model provides lower and more accurate employment estimates because it takes displaced jobs into account. The empirical results also show that a region that invests in human and physical capital encourages firms to increase employment in the region. The conclusion of this dissertation is that government policymakers should incorporate these two factors into their economic development plans.