Regional Income Convergence in Appalachia: Exploring the Factors of Regional Economic Growth in a Transitioning Economy

Abstract

La teoría de convergencia, derivada de la teoría neoclásica de crecimiento, sugiere que las diferencias regionales de salario disminuirán con el tiempo. Estudiada en una variedad de marcos, hay evidencia de que la convergencia ocurre, aunque condicionada por la capacidad económica regional y su participación en la más amplia economía neoclásica. Dentro de los Estados Unidos, la evidencia de convergencia está presente a niveles nacionales y subnacionales. De interés particular en este proceso es la Appalachia, una región que ha tomado un papel periférico al de la amplia economía neoclásica y que no está sujeta a la convergencia. Recientes investigaciones sugieren la posibilidad de convergencia y movimiento hacia un proceso de crecimiento neoclásico, aunque la evidencia es indirecta y ambivalente. Este trabajo examina la convergencia en Appalachia y la influencia de factores de crecimiento tanto neoclásicos como específicos a esa región. Los resultados indican la convergencia y un movimiento de la economía de Appalachia que se aleja de una estructura centro-periferia hacia un proceso más neoclásico impulsado en gran medida por la estructura industrial y el capital humano.

Sustained Firm Growth and Regional Income Convergence

“…This result is consistent with the findings of Santopietro (2002), who found that boom cycles associated with extractive industries can lead to unpredictable results in a convergence model. Over time, these outlier effects can lessen as rural, extractive economies diversify and become more strongly integrated in the national economy, as James and James (2015) noted in the case of central Appalachia. Therefore, these outliers need to be contextualized as a very time-specific result, and subject to temporal model volatility as noted by Barro and Sala-I-Martin (2004).…”

“…Industry-specific conditioning variables, drawn from the Minnesota Population Center, are typical of those found in other convergence studies. These specializations are typically expressed as either the percentage of employment in a sector (P. Johnson and Takeyama 2001;Connaughton and Madsen 2004;Higgins, Levy, and Young 2006) or location quotients (James and Campbell 2014;James and James, 2015). Here, they are expressed as the natural log transform of location quotients.…”

“…Other variables included are drawn from recent overlapping literature. For example, a negative Sustained Firm Growth and Regional Income Convergence 53 relationship between Agriculture and Agricultural Services and convergence is expected while Mining is hypothesized to exert a positive influence, following James and Campbell (2014) and James and James (2015), respectively. Primary sector activities are typically associated with rural areas of modest income.…”

“…Thus, its expected sign is positive. Concentrations of transportation, communication, and public utilities (TCPU) and finance, insurance, and real estate (FIRE) are also expected to contribute positively to future income growth, following Connaughton and Madsen (2004), Higgins, Levy, and Young (2006), James and Campbell (2014), and James and James (2015). Both are relatively high-skill sectors and employment concentrations in TCPU reflect facilitating services that connect regions internally and externally, which should enhance regional productivity and expand market access and the spatial margins of profitability for those firms that rely on them.…”

“…Its importance is well known and both highway access and highway expenditures (aggregate and per capita) are commonly found in the literature. Interestingly, whereas we operationalize infrastructure spending as highway expenditures per capita within EAs (HWAY) and hypothesize a positive influence on income growth (Rupasingha, Goetz, andFreshwater 2000, 2002;James and James 2015), others have found either negative or insignificant impacts on growth (P. Johnson and Takeyama 2001;James and Campbell 2014). Highway expenditure data are derived from the 1992 Census of Governments.…”