This work examines several topics related to regional economic development and public policy. It consists of three essays. The first essay examines whether spatial linkages between regions and coincident and leading employment indices based on resident's perceptions of the local economy improve forecast performance. The state of Michigan is used as the study area and separated into 6 geographic regions. I compare forecast performance using both unrestricted vector autoregressive and Bayesian vector autoregressive models. The results show significant improvement in forecast accuracy for each forecasting technique by adding leading and coincident indicators of economic activity. The results also suggest that spatial linkages for Michigan regions aid in predicting future employment levels in 8-quarter ahead forecasts. Furthermore, I compare the forecast performance of the region-specific indices based on surveys of residents in each of the 6 Michigan regions with analogous indices based on a nationally representative survey. I find that the region-specific indices outperform the national indices, while the national indices improve forecast performance over each of the models without indices. The second essay explores the effect of the business size distribution on per-capita income and employment growth. I estimate a growth model with U.S. county data from 1990-2000. The business size distribution is measured in two ways. First, the distribution is measured as the share of employees across nine establishment size categories that range from micro firms (1-4 employees) to large firms (1000+ employees). Second, I use several indices that include an index similar to a Gini coefficient and the Atkinson index of inequality. The results show that business size distribution has a significant impact on county level growth patterns. Furthermore, the employment shares in small firms increase employment growth, but decreases per-capita income growth. The results have implications for national economic growth policies, such that emphasizing entrepreneurship and small firms is well suited in times of high unemployment, while in times of stable employment growth shifting policies toward large firms may spur income growth. The third essay examines the effect of ethanol production facilities on the local labor market. Few studies examine this question with historical data, largely due to the data constraints related to local ethanol production. Using a difference-in-difference identification strategy, I use a data set containing the timing of ethanol plant construction and production start dates in 12 states from 1990-2011 to estimate the net employment effect. Furthermore, I add leads and lags to the start of ethanol production to examine the dynamic response of an ethanol plant on a local economy. When using non-urban, high corn counties, the results suggest a positive and statistically significant employment multiplier, with the overall average local employment impact of approximately 125-200 jobs. Conversely, the analysis shows little evidence of a positive economic effect resulting from the construction of an ethanol plant. The dynamic estimates suggest that the local employment multiplier grows over the first several years of ethanol production, and yields a long-run local employment impact of approximately 275 jobs per production facility.
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