Three essays on rural economic growth

Georgeanne Michael Artz

ISU General Staff Papers from Iowa State University, Department of Economics

Abstract: This dissertation is a collection of three papers, each analyzing a particular issue related to economic growth in rural America. The first paper explores the problem of defining rural and the implications for measuring rural growth. It discusses the sample selection problem inherent in using classification methods based on population that change over time. Fast growing rural areas grow out of their rural status, so using the most recent definition of rural in an analysis of growth excludes the most successful places. The findings demonstrate that average economic performance of the areas remaining rural significantly understates the true performance of rural places and that conclusions about which factors affect growth are sensitive to how rural is defined. The second paper examines the economic consequences of industrial recruitment, focusing on the meat packing and processing industry. Growth in this industry has generated a significant amount of controversy regarding the costs and benefits of this type of economic development. The effects of the industry on social and economic outcomes in non-metropolitan counties of twelve Midwestern states are analyzed using a difference-in-differences approach. Results suggest that as the meat packing industry's share of a county's total employment and wage bill rises, total employment growth increases. However, employment growth in other sectors slows, as does local wage growth. We find no effect on the growth rates for crime or government spending. The final paper analyzes brain drain, the out-migration of young, college-educated workers, which is a serious concern for many rural areas. Existing research on this topic focuses predominately on young adults and does not capture individuals' long-term preferences for locations. This paper employs a mixed logit model to examine the role of college education and location specific capital in rural and urban residence choices of individuals over time. It extends current research in this area by including observations on individuals over time and by recognizing that preferences for rural areas vary in the population. Findings imply that higher levels of education do reduce the probability of choosing a rural residence; however, they suggest preferences for rural locations vary significantly in the population.

Date: 2005-01-01
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