Gebremeskel H. Gebremariam

EMPLOYMENT, INCOME, AND MIGRATION IN APPALACHIA: A SPATIAL SIMULTANEOUS EQUATIONS APPROACH*

Appalachia remains a symbol of poverty in the midst of prosperity. During the 1990s it fell further behind the rest of the nation. Persistent poverty during a period of strong growth is a serious as well as an interesting subject to study. We examine determinants of growth in Appalachia between 1990 and 2000. We show that employment, migration, and median household income were jointly determined by regional covariates and that county economic conditions were conditional on the performance in neighboring counties. One conclusion is that regional cooperation and geographically focused programs may yield the greatest returns to policy investments.

Analysis of county employment and income growth in Appalachia: a spatial simultaneous-equations approach

County median household income and employment growth rates tend to be characterized by spatial interaction. A spatial simultaneous-equations growth equilibrium model was estimated using GS2SLS and GS3SLS. The results indicate strong feedback simultaneity between employment and median household income growth rates. They also show spatial autoregressive lag simultaneity and spatial cross-regressive lag simultaneity with respect to employment and median household income growth rates, as well as spatial correlation in the error terms. Estimates of structural parameters show strong agglomerative effects and significant conditional convergence with respect to employment growth and median household income growth in Appalachia in the 1990 s.