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Comprehensive revision of local area personal income estimates, 1969-90.

This article describes the comprehensive revision of the estimates of personal income for counties and metropolitan areas for 1969-90. For each of these local areas, tables 1 and 2 present the revised estimates of personal income and per capita personal income for 1989-90 and new estimates for 1991.

A comprehensive revision of the local area estimates of personal income is made approximately every 5 years to incorporate the changes that result from a comprehensive revision of State personal income and new source data and estimating methods for local areas.(1) This local area revision incorporates results from the 1992 comprehensive revision of State personal income, which in turn incorporated results from the 1991 comprehensive revision of the national income and product accounts (NIPA's) and the 1992 annual NIPA revision.(2) In addition, this revision incorporates extensively revised metropolitan area definitions that reflect data from the 1990 Census of Population.

Table 1 presents estimates for the county-based metropolitan areas that are defined for statistical purposes by the Office of Management and Budget. Revisions to the definitions of these areas are discussed in the section "New metropolitan area definitions." Table 2 presents estimates for counties and county equivalents. For Virginia, estimates are presented for the larger independent cities as well as for most counties; estimates for the smaller independent cities are combined with estimates for their adjacent counties.

Changes in source data and estimating methods

This section describes the changes in subnational source data and estimating methods that were introduced for specific components of personal income in this comprehensive revision; most of these changes resulted from the use of census data that were not available at the time of the last comprehensive revision. Not discussed are changes resulting from the comprehensive NIPA revisions that involved detailed estimation that cannot be replicated for the State and local area estimates. Those changes were implicitly incorporated into the State estimates through the use of the national estimates of about 400 detailed subcomponents of personal income as the "control totals" to which the State estimates are made to sum; the county estimates in turn are made to sum to the State estimates.

Wage and salary disbursements. - The 1987-91 county estimates of the wages and salaries of the employees of farms and farm labor contractors in most States are now based on data from the 1987 Census of Agriculture; because pertinent annual data are not available, the geographic distributions from the 1987 census are used without change for each subsequent year. The estimates for 1983-86 are based on straight-line interpolations between data from the 1982 and the 1987 censuses. For States with legally mandated unemployment insurance (UI) coverage of these employees and States where voluntary coverage by employers is near-complete, the data reported by employers on UI tax returns are used in preference to the census data because the UI data are available annually. For the wages of farm employees, the number of States for which the UI data are used has now been increased to ten; for the wages of the employees of farm labor contractors, the UI data continue to be used for only three States.

Farm proprietors' Income. - The 1987-91 county estimates of most of the components of gross farm income and expenses for which census of agriculture data are used are now based on data from the 1987 census; the 1987 geographic distributions are extrapolated to subsequent years by pertinent data, if available, or used without change for each subsequent year. The 1983-86 estimates are derived from interpolations between the 1982 and 1987 censuses. The 1987 census data for "other" farm related income and "other" production expenses win be incorporated into the estimates when the 1992 county estimates are released in April 1994.

Personal interest income. - The 1990-91 county estimates of interest from State and local government bonds are now based on data on the number of high-income households from the 1990 Census of Population; because pertinent annual data are not available, the 1990 geographic distributions are used without change for 1991. The 1981-89 estimates are now derived from straight-line interpolations between data from the 1990 census and comparable data from the 1980 census.

Rental income of persons. - The 1990-91 county estimates of imputed rent (the net rental value of owner-occupied nonfarm dwellings) are now based on data on the number and value of owner-occupied houses and mobile homes from the 1990 Census of Housing; because pertinent annual data are not available, the 1990 geographic distributions are used without change for 1991. The 1981-89 estimates are now derived from interpolations between data from the 1990 census and comparable data from the 1980 census.

Transfer payments. - The county estimates now incorporate two definitional changes that affected the national estimates - the reclassification of bad debt losses as financial transactions and the reclassification of the benefits paid by the Pension Benefit Guaranty Corporation from business transfer payments to Federal transfer payments. As a result of the reclassification of bad debt losses, the subcomponent for consumer bad debts was discontinued. As a result of the reclassification of the benefits, the scope of the subcomponent that consisted of all business transfer payments except consumer bad debts was reduced, and a new subcomponent of Federal transfer payments was established. The national estimate of this subcomponent is allocated to States and counties in proportion to social security benefits, which are assumed to reflect the geographic distribution of the retired population. Previously, the national estimate of the subcomponent that included these benefits was allocated to States and counties in proportion to the civilian population.

Adjustment for residence. - The 1971-79 estimates of this adjustment - the net flow of the earnings of intercounty commuters - were revised for selected counties. The 1970 and 1980 residence adjustments are based primarily on the BEA wage and salary estimates and on journey-to-work data from the censuses of population, but they also reflect modifications for 187 counties for which the BEA wage estimates and the census Journey-to-work data are inconsistent. The 1971-79 estimates now reflect an improved method of interpolation between the census-year estimates for these counties. Journey-to-work data from the 1990 Census of Population will be incorporated into the county residence adjustments for 1981 and later years when the 1992 county estimates are released in April 1994.

New metropolitan area definitions

The metropolitan area (MA) definitions used by BEA for its MA personal income estimates are the county-based definitions issued by the Office of Management and Budget (OMB) for Federal statistical purposes. These areas consist of 52 primary metropolitan statistical areas (PMSA's), 239 metropolitan statistical areas (MSA's), and 12 New England county metropolitan areas (NECMA's).(3) The PMSA's and one NECMA are grouped into 17 consolidated metropolitan statistical areas (CMSA's).

The estimates presented here use the revised MA definitions issued by OMB in December 1992. These revised definitions reflect, for the first time, results of the 1990 Census of Population together with some minor changes to the standards for MA definition. The most important changes to the definitions were the recognition of eight new MSA's and one new NECMA, the addition of many previously nonmetropolitan counties to existing MA's, and changes to the structure of more than one-half of the CMSA's.

A total Of 97 formerly nonmetropolitan counties were added to MA's by the redefinitions, mainly because of increasing rates of commuting to work by the counties' residents into the central counties of the MA's.(4) Ten of these counties are in the new MA's, and 87 were added to existing MA's. A total of 18 counties were deleted from MA's, mainly because of slower population growth. The net effect of these additions and deletions was to transfer $70.3 billion from nonmetropolitan to metropolitan personal income in 1991.

Many of the largest MA's, including five of the seven largest, were extensively changed in these new definitions. (The seven largest MA's - those centered on New York City, Los Angeles, Chicago, Washington-Baltimore, San Francisco, Philadelphia, and Boston - together accounted for almost one-third of the Nation's personal income in 1991.) The Washington-Baltimore CMSA was created by the consolidation of the former MSA's centered on Washington, DC, Baltimore, MD, and Hagerstown, MD; each of these areas is now recognized as a PMSA. In addition, eight formerly nonmetropolitan counties were added to the CMSA and to the Washington, DC-MD-VA-WV PMSA. Four formerly separate NECMA's were merged into the Boston NECMA, which now extends north to include Rochester, Portsmouth, and Manchester, NH; west to include Fitchburg and Worcester, MA; and south to include Fall River and New Bedford, MA. The most striking change to the New York CMSA was to its internal structure. Five former PMSA's in New Jersey and one former PMSA on Long Island were merged into the former New York, Ny PMSA, which is now called the New York-Newark, NY-NJ-PA PMSA (a formerly nonmetropolitan county in Pennsylvania was also added).(5) The internal structure of the Chicago CMSA was also changed, as three former PMSA's were merged into the Chicago, IL PMSA, which now comprises all of the Illinois portion of the CMSA except the newly added Kankakee, IL PMSA. The Philadelphia CMSA was changed in composition, as the Trenton, NJ PMSA was transferred to the New York CMSA, and as the former Atlantic City, NJ PMSA was added as the Atlantic-Cape May, NJ PMSA. 1. The timing of the availability of some of these source data will make it necessary to revise the State and local area estimates independently of this comprehensive revision. In April of 1994, the State and local area estimates for 1981-91 will be further revised in order to complete the incorporation of the data from the 1987 Census of Agriculture and the 1990 Census of Population and to incorporate 1987-89 data from the Internal Revenue Service on the income of sole proprietorships and partnerships. (The Internal Revenue Service data currently used to estimate the income of sole proprietorships and partnerships by county are for 1981-83.) 2. See "The Comprehensive Revision of the U.S. National Income and Product Accounts: A Review of Revisions and Major Statistical Changes," Survey of Current Business 71 (December 1991): 24-40; "Annual Revision of the U.S. National Income and Product Accounts," Survey 72 (July 1992): 6-45; and "The Comprehensive Revision of State Personal Income," Survey 72 (August 1992): 44-59. 3. For the New England region, BEA uses a county-based definition of rather then a definition in terms of cities and towns, because the available data for cities and towns are insufficient.

A list of the metropolitan areas and their definitions (Accession Number PB 93-111-7313) is available from the National Technical Information Service (NTIS); write to NTIS, Document Sales, 5205 Port Royal Road, Springfield, VA 22161, or call (703) 487-4650. 4. For the purposes of MA definition, many counties that are commonly considered to be suburban in character are defined as central counties. 5. OMB has some of the changes to the PMSA composition of the New York CMSA under reconsideration, but no changes to the current MA definitions will be reflected in the BEA estimates until April 1994.
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Title Annotation:includes article on data availability
Author:Baily, Wallace K.
Publication:Survey of Current Business
Date:May 1, 1993
Words:1839
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