Research Progress Report 151
	 	 September, 1964
Southern Indiana Employment Projections--1970
George R. King and L. T. Wallace Department of Agricultural Economics
Summary
The purpose of this study was to develop employment projections for southern Indiana for 1970. Historical trends in employment and related characteristics were needed to develop economic and statistical models for projecting farming, manufacturing and service employment.
Farm employment was estimated by projecting the number of commercial farms and multiplying by a per farm labor coefficient.
Manufacturing employment was estimated by a time-series multiple regression model, utilizing 1948-1961 annual data. Independent variables were: annual average earnings in manufacturing in southern Indiana, an index of U.S. manufacturing man-hours, an index of U. S. manufacturing raw material prices, and an index of U. S. manufacturing plant and equipment expenditures. A trend variable was a significant substitute for the wage variable. Combination of these variables explained from 92 to 95 percent of the variation in manufacturing employment. The independent variables were projected for the year 1970 by simple linear regression, and the
results were then used to obtain 1970 manufacturing employment estimates.
Economic base theory indicates that service employment is a function of farm and manufacturing employment. A linear regression equation, expressing service employment as a function of manufacturing employment, 1948-1961, explained 84 percent of the variation in service employment. Trend extrapolation of the ratios and the linear regression equation utilized the projections of agricultural and manufacturing employment to obtain service employment estimates for 1970.
Representative high and low employment estimates were selected from projections in each of the three employment sectors. By 1970, farm employment was estimated to decrease between 13, 000 and 16, 000 people, a 35 to 43 percent decline from the 1960 level. Manufacturing employment was projected to increase between 3,000 and 10,000, a 3 to 11 percent increase from 1960. Service employment was expected to increase between 10, 000 and 31,000, a 6 to 18 percent increase by 1970. Other employment, consisting mainly of mining and construction, is estimated with a range from no increase to a 13 percent increase over the 1960 level.
PURDUE UNIVERSITY • Agricultural Experiment Station • Lafayette, Indiana