The hollowing-out process in the Chicago economy, 1975-2011

Abstract

The metropolitan economy of Chicago has experienced a significant transformation in its economic structure over the past twenty years. Using a method for extraction of input-output tables that has been described elsewhere, it has been possible to produce an economic photograph of the changes in the Chicago region, annually, for the period 1975-2011. This paper explores the nature of these structural changes through examination of the changes in the composition of the Leontief multipliers and changes in the economic landscapes interpreted through application of the multiplier product matrix. The resulting picture, at the nine-sector level of detail, reveals a hollowing-out process, with intrametropolitan dependence replaced by dependence on sources of supply and demand outside the region. Furthermore, the analysis reveals a complex internal transformation, as dependence on locally sourced manufacturing inputs is replaced by dependence on local service activities.