While a great deal of attention has been directed to economic structural changes affecting the metropolitan, state and regional economies of the US, very little research has explored the role of demographic changes and their likely impacts over the next several decades. In particular, the issues of an aging population, in-migration (especially of younger Latinos) and the out-migration of those seeking employment opportunities elsewhere as well as those moving to other places to retire promise to create a dynamic impact on the growth and development of regional economies. Further, these demographic changes are themselves likely to both respond to and affect the economic structural changes in the regional economies.
To date, these demographic-economic interactions and feedbacks have only been explored using aggregated demographic data where a "representative household" was used to examine the role of consumption. Prior analyses that was focused on the Chicago economy revealed dramatic differences in consumption patterns by households of different ages and incomes and the complex interactions that an aging population in concert with different profiles for in- and out-migrants can have on indicators of welfare for a regional economy over time. The initial two-region model (Chicago-Rest of the US) will be expanded to a multi-region context (initially, the Midwest, South and Rest of the US) to capture the interactions between structural changes in the economy (such as the fragmentation of production and outsourcing, changes in interstate and international trade) and demographic changes. The intersection between economic and demographic changes and interactions between the effects of aging, immigration, retiree out-migration and changes in social security funding and retirement age provide a complex array of potential outcomes for the regional economies of the US. The multi-regional demographic-economic model will be linked with a policy mix module to explore alternative scenarios such as whether a region should be more pro-active in attracting immigrants. The analysis will provide a link between current state of the art modeling and the policy arena where there is a dearth of consistent, soundly based analysis to help policy-makers evaluate options and where important opportunities remain to advance the state of the art in modeling short- and long-run implications of complex demographic changes on regional economies.
