Economic Resilience in Australia Huong Dinh, Ben Freyens, Anne Daly, - - PowerPoint PPT Presentation

Recent Trends in Community Economic Resilience in Australia

Huong Dinh, Ben Freyens, Anne Daly, Yogi Vidyattama 22 June 2015

Background

• Major shocks during 2006-2011

– The Millennium Drought – The Global Financial Crisis – The Mining Boom

• A need to build or reinforce the resilience of local communities

– Counteract negative impacts – Adapt to changed conditions

• A rising call for measuring resilience capacity at community level

– Identify communities of concern with low or declining levels of resilience – Assist policy makers to develop supportive strategies

Research Questions

• What are the patterns of change in community

economic resilience (CER) and its components across states, regions and over time?

• How do the components of CER interact?
• Is there a long-term association between CER and

household income?

CER constructs, data and variables

Human capital % people aged 15 and over with a university degree or other tertiary qualification % people aged 15 and over with an advanced diploma or diploma qualification % employed people classified as professionals % employed people who work at Skill Level 1 Social capital % population with internet use % population participating in voluntary work % population with English proficiency Natural capital % employed people working in agricultural and mining industries % population with a broadband connection % households with a four or more-bedroom private dwelling proportion of households with at least three motor vehicles % households with a high mortgage repayment % households with a high rent payment Physical capital Financial capital Diversity Accessibility % population in the national 9th or 10th income deciles % of adult population in the labour force Household affordability ratio (the fraction of household income over rental payment) Comparing the community-level sector-specific employment rate with the national rate Remoteness and accessibility in terms of access along the road network from populated localities to each the five categories of Service Centres CER Census ARIA

Spatial unit: SA Level 1

Data exclusion

– Exclude SA1 with any of those characteristics:

• population is less than 10;
• any selected denominator variables are less

than six

• more than 80% of its population live in non-

private dwellings.

Index computation

– Principal component analysis:

• turns a large number of highly correlated variables into a smaller

set of independently transformed variables

– Indexes range from 0 (low resilience) to 100 (high resilience) – Working data: Indexes computed for 47,490 SA1s in 2006 and 44,889 SA1s in 2011 out of a grand total of 54,805.

Fixed Effect Estimation

• Adjusting for SA1-specific/state-specific (𝑏𝑗/𝜄

𝑘) effects

• Testing if the indexes (𝑍

𝑗𝑢) change over time ( 2011 vs 2006):

𝑍

𝑗𝑢 = 𝑏𝑗+∝𝑢 𝑢 + 𝜁𝑗𝑢

• Testing the association between capital-related indexes (𝐷𝑗𝑢) and diversity

and accessibility indexes (𝑌𝑗𝑢): 𝐷𝑗𝑢 = 𝑏𝑗+∝𝑢 𝑢 + 𝛾𝑌𝑗𝑢 + 𝜁𝑗𝑢

• Testing the association between household income (𝐽𝑗𝑢) and CER index

(𝐷𝑗,𝑢−1): 𝑚𝑝𝑕𝐽𝑗𝑢 = 𝛿 + 𝜄

𝑘𝑇 𝑘 + 𝜀𝑚𝑝𝑕𝐽𝑗,𝑢−1 + 𝜍𝐷𝐹𝑆𝑗,𝑢−1 + 𝜏𝑗𝑢

Human Capital Index

20 40 60 2006 2011

Social capital index

55 60 65 70 2006 2011

Natural Capital Index

5 10 15 2006 2011

Physical Capital Index

20 40 60 80 2006 2011

Financial Capital Index

35 40 45 2006 2011

Diversity Index

50 100 2006 2011

Accessibility Index

50 100 150 2006 2011

CER Index

40 45 50 55 2006 2011

CER Capital-Related Constructs by Level of Diversity

Level of diversity Mean difference test Low High Mean SE Mean SE Mean diff. SE p-value Human 31.2 0.08 31.4 0.06 0.23 0.05 <0.001 Social 62.0 0.03 62.3 0.02 0.27 0.05 <0.001 Natural 5.2 0.02 4.5 0.01

• 0.64

0.03 <0.001 Physical 38.4 0.06 40.0 0.03 1.58 0.08 <0.001 Financial 39.5 0.02 39.8 0.01 0.33 0.02 <0.001

CER Capital-Related Constructs by Level of Accessibility

Level of accessibility Mean difference test Low High Mean SE Mean SE Mean diff. SE p-value Human 25.4 0.12 33.4 0.08 8.0 0.15 <0.001 Social 65.8 0.06 61.0 0.04

• 4.7

0.07 <0.001 Natural 5.3 0.12 4.6 0.04

• 0.7

0.17 <0.001 Physical 31.4 0.12 42.4 0.09 11.0 0.15 <0.001 Financial 39.5 0.03 39.8 0.01 0.4 0.03 <0.001

Association Between Household Income and CER

Log of household income Coef. SE t P>|t| Lagged CER 0.04 0.0003 159.50 0.000 Lagged log of household income 0.08 0.0021 41.00 0.000 State (omitted) Cons

• 1.87

0.0152

• 122.95

0.000 R squared 0.55 Number of observations 46012

Conclusions

• There was a statistically significant improvement in the
• verall CER index in all states and regions.

– CER improved over time in human, social and physical capital terms, declined in diversity terms. – Natural index improved in all regions and states except ACT and VIC. – Financial index declined in all regions and states except ACT. – Accessibility index improved in most states except VIC and TAS (unchanged) and the MDB (reduced)

Conclusions (cont.)

• Communities with a higher level of economic diversity had

higher human, social, physical and financial capitals but lower natural capital,

• Communities with a lower level of accessibility reported

lower levels of human, physical and financial capital but higher levels of social and natural capital.

• CER has a long-term positive impact on household income