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King University News :: King College’s Economic Studies Team Reports on Coalfield Region of Southwestern Virginia

The King College Regional Economic Studies (KCRES) team has released its fourth report, “Economic Impact Multipliers for the Coalfield Region of Southwestern Virginia.”  The coalfield region studied consists of the counties of Buchanan, Dickenson, Lee, Scott, Russell, Tazewell, Wise, and the City of Norton. 

The team’s fourth report was prepared by Dr. Sam Evans, assistant professor of Finance and Economics, and Dr. Jerry Wood, professor of Business, both of King’s School of Business and Economics.  The KCRES team was formed within the School of Business in 2010 to provide analysis of economic problems and opportunities confronting the region served by King College.

The study reported employment and earnings multipliers for 25 selected industries in the coalfield region. These industries account for the vast majority of employment and earnings for residents of the region and represent a broad cross-section of the region’s economic activity.

“The multipliers are based on fixed inter-industry relationships in the 2002 national input-output (I-O) accounts developed by the Bureau of Economic Analysis,” said Dr. Evans.  “To develop multipliers for the Coalfield Region, the national I-O relationships are adjusted to reflect the industrial structure and trading patterns in the region’s economy as of 2008.”

The employment and earnings multipliers point to the importance of the energy sector, especially coal mining, to the economy of the coalfield region.

“Coal mining directly accounted for 7.1 percent of total employment and 15.7 percent of total earnings in the region in 2011,” said Dr. Evans.  “However, after the multiplier effects are taken into account, 16.1 percent of total employment and 25.7 percent of total earnings received by households in the region can be traced to the coal mining sector.”

Changes in coal mining production and employment have significant impacts on the region’s economy. The long-term decline in coal mining employment appears to have been arrested, at least for now.  However, coal mining faces an uncertain future; this uncertainty mainly is due to the challenging and, from the industry’s standpoint, harsh regulatory environment. 

The study’s authors conclude that any significant reduction in coal mining employment is likely to create major issues for the region’s business, political, and community leaders.

The next study in the KCRES series is slated for release sometime during fall 2012.  Study No. 4, “Economic Impact Multipliers for the Coalfield Region of Southwestern Virginia,” is available in electronic format and can be found on King's web site at http://business.king.edu/kcres.