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Page 15 Industry Employment Demand A multiple regression was fit, in log - log terms, to estimate the impact of changes in money income, industry prices and the imposition of smol�ing-ban regulationson industry employment. Individual functions were estimated for the bar/tavern and restaurant industries. In each case, industry employment was regressed against state personal income, an industry price deflator, and "dummy" variables to capture the effects of anti-smol�ingregulations at the locaUstate levels and to handle transitional issues associated with the terrorist attack on the World Trade Center. Regression of Ln (NYS employment in the bar industry) on the following: coefficient t-value intercept 9.54044 15394 Ln (NYS personal income) 0.1542 135 I}tu�m�+� �.2�7� -�.�$� �u}� 0. t 1��3 �394 ��r+d��p�ri�� -0,�'��11 -1,8�� i�c�'1 � em�� 0� 1591 3_fidB r-square = 0.7148 r-bar square = 0.6435 where + NYS personal income • household income in millions of dollars adjusted one year forward 1978-2043 ■ industry price • price deflator for the bar industry (2000=100.0)1978-2003 ■ DummyB - category variable coded to reflect industry coverage of 1995 NYC ban and 2003 NYC/NYS bans 1978-2003 ■ Dummy2 - category variable to capture transitional period following the WTC attack1978-2003 ■ emp-1 ! emp-3 - ratio of industry employment (lagged one period) divided by industry employment (lagged three periods) included for statistical estimation reasons 1978-2003 The estimated coefficient of the State personal income variable, adjusted by industry labor productivity, implies an income elasticity of approximately 1.65. This estimate is consistent with other research studies. The bar/tavem industry is seen as a"��m�l" good industry by economists. The positive sign of this coefficient supports this theoretical "a priori" view. However, the magnitude of the coefficient strongly suggests that consumers do not view this industry's product as a necessity - the further away from zero, the more the good is deemed a non-necessary or "luxury" good. On the other hand, the income elasticity in this industry is significantly less than for many high-end, super- luxury goods, such as BMWs, yachts, etc.