Finding Why Some Rural Places Remain Poor
Wednesday, September 3rd, 2008Interesting article coming out of the The Daily Yonder: Keep it Rural. Two economists, Stephan Goetz and Anil Rupasingha, set out to find which social or political factors seem to have real effects on poverty and development in rural counties. They piled reams of data into their computers and began to sort out which seemed to matter. (Goetz heads the Northeast Regional Center for Rural Development at Penn State University.)
A brief summary of their results includes how factors tended to affect family poverty rates in rural communities:
- “Social Capital. The researchers counted the places people might gather, socialize and work together (golf courses, bowling centers, civic associations, political organizations and clubs). They found that rural places with more of these meeting places and organizations had lower levels of family poverty. Social capital seemed to reduce poverty in rural America. This wasn’t true in the cities, where social capital had little effect on family poverty rates.
- Federal Grants. This one is interesting, given the contortions local governments go through to obtain federal grants. Higher levels of federal grant funding tend to make poverty worse. This surprised the researchers. They thought, perhaps, that grants were given to poorer counties, accounting for the associaton. But the effect remained no matter how they juggled the data and controlled for prior poverty.
- Goetz and Rupasingha summarized their findings, writing that “counties with proportionately more high school graduates, higher employment rates and female labor force participation rates, more employment in manufacturing sector, more college graduates, and higher levels of social capital, had lower levels of poverty rates in 1999. On the other hand counties with more children, a higher number of permanent residents, higher income inequality, higher proportion of non-black minorities, greater ethnic diversity, higher proportion of young adults, and lower levels of political competition had higher levels of poverty in 1999.” Factors that were tested and considered included:
• Education. Education lowered poverty rates. However, education mattered more in cities than in rural areas. Having a high school degree or more schooling reduced family poverty rates to a greater degree in urban areas than in rural communities.
• Inequality. Income inequality tended to make places poorer. Places with larger gaps between very rich and very poor had higher percentages of families living in poverty.
• Big Box Stores. The more big box retailers like Wal-Mart there are in a community, the higher the family poverty rate. Many rural communities try to attract big box retailers. The two researchers conclude this strategy may be self-defeating.
To read the full report, you can go to Journal of Socio-Economics (Number 36, 2007, pages 650-671)