The Economic and Fiscal Contributions of the “Cash for Clunkers” Program: National and State Effects

The Consumer Assistance to Recycle and Save Program, also known as “Cash for Clunkers”, was a $3 billion government incentive to boost automotive industry sales that was in place July 24, 2009 through August 24, 2009 that involved consumers trading in their older and less fuel efficient vehicles for new vehicles. Using the REMI model, the Center for Automotive Research estimated net new vehicle sales and employment induced by the Cash for Clunkers program and found that the program sold 395,000 new vehicles, added 40,200 full-time equivalent U.S. jobs, increased gross personal income by $2.085 billion, and net revenue by $1.275 billion. The Center for Automotive Research also included recommendations for future implementations of similar programs, most notably for policy makers and program administrators to evaluate the equity attributes of the program. In terms of this study, relatively affluent consumers were able to take advantage of Cash for Clunkers, but low-income workers could barely participate and, therefore, saw little economic benefit.

Center for Automotive Research – The Economic and Fiscal Contributions of the “Cash for Clunkers” Program [full PDF]

The Employment and Fiscal Effects of Michigan’s MEGA Tax Credit Program

The W.E. Upjohn Institute for Employment Research analyzed Michigan’s MEGA tax credit program with their REMI model and estimated the program’s economic effects. The MEGA tax credit program supplies discretionary tax credits to businesses, with the credit tied to the personal income taxes paid by employees on the new or retained jobs. Researchers simulated the economic and fiscal effects of MEGA by simulating the effects of any jobs created and by simulating the effects of how the program’s credits are financed. The REMI model scenarios yielded percentage shocks to personal income and population for each year, which could then be multiplied by the Institute’s fiscal impact parameters to generate a predicted net fiscal benefit or cost for each year. This report found that the lower-bound assumptions about the MEGA tax credit program identify that it has created jobs over the time period of 1996-2007 at an average cost of less than $4,000 per year of employment created.

W.E. Upjohn Institute for Employment Research – The Employment and Fiscal Effects of Michigan’s MEGA Tax Credit Program [full PDF]

An Assessment of Connecticut’s Tax Credit and Abatement Programs

The Connecticut General Assembly mandated that the Department of Economic and Community Development and the Department of Revenue Services prepare a report every three years in order to assess the economic and fiscal impact of the state’s tax credit and abatement programs. This study used the REMI Policy Insight model to analyze the tax credit programs that were in effect for calendar years 1995 through 2007 inclusive. Each tax credit, abatement, and exemption program was evaluated individually for its impact on jobs and its fiscal return to the state. The top three claim amounts and number of claims were for Connecticut’s 5% Fixed Capital Investment Tax Credit, the Electronic Data Processing tax credit, and the Research & Development tax credit. This report included historical and quantitative details about each tax credit, tax abatement and exemption program and the economic modeling used to obtain their economic and fiscal impacts.

Connecticut Department of Economic and Community Development – An Assessment of Connecticut’s Tax Credit and Abatement Programs [full PDF]

Analyzing the Benefits and Costs of Economic Development Projects

REMI’s Policy Insight model was used in collaboration with the RIMS II and IMPLAN models to demonstrate the importance of integrated analysis when measuring the importance of future economic development projects in North Carolina. While small regional projects may not need the most comprehensive analytics available, the combination of economic and fiscal impact analyses will better serve major prospective policies for economic growth going forward by removing some of the guesswork and providing a template for the data and information that the user will supply. Models like these also assist state governments like North Carolina’s in more accurately reflecting local conditions and the specific details of a given economic development project.

UNC Chapel Hill – Analyzing the Benefits and Costs of Economic Development Projects [full PDF]

Economic Impacts of Proposed State Government FY2011-FY2012 Budget Reductions in Education, Health, and Human Services for the Commonwealth of Virginia

The Center for Economic and Policy Studies, a unit of the Welden Cooper Center for Public Service at the University of Virginia, incorporated the REMI PI+ model into a study on the economic impacts of FY 2011-2012 budget changes for the areas of health, human services, and education. The analysis discovered that larger budget reactions led to larger negative economic impacts and that one-third of the total jobs lost would be from the health care and social assistance sectors. Researchers also found that approximately 3,000 education jobs and 2,500 public administration jobs would be lost by 2012.

Weldon Cooper Center for Public Service – Economic Impacts of Proposed State Government FY2011-FY2012 Budget Reductions [full PDF]