M. Rose Olfert

Voting with Their Feet: Jobs versus Amenities

The determinants of rural and urban community population change over the period 1991-2001 are investigated at a very fine level of disaggregation for Canada. The study examines the influence of local amenities, economic factors, and agglomeration economies on population growth for age cohorts starting from the very young to the elderly. Motivated by the objective of assessing the overall jobs versus people question in economic development, the emphasis is on estimating the relative contribution of groupings of variables in explaining the variations in population change rather than the contribution of individual variables. Results indicate that rural and urban populations are influenced to differing degrees by amenity, economic, and urban scale groupings of variables and that there are variations among age cohorts in both urban and rural areas. While economic variables are the most influential in population change for all rural cohorts, their contribution somewhat diminishes with age. In urban areas, amenity, and economic variable groupings have approximately equal importance across all cohorts. For the key young adult cohort, the economic grouping is clearly the most influential in rural areas, while it is a close second to amenities in urban areas. Copyright 2007 Blackwell Publishing.

The Geographic Diversity of U.S. Nonmetropolitan Growth Dynamics: A Geographically Weighted Regression Approach

Spatial heterogeneity is introduced as an explanation for local-area growth mechanisms, especially employment growth. As these effects are difficult to detect using conventional regression approaches, we use Geographically Weighted Regressions (GWR) for non-metropolitan U.S. counties. We test for geographic heterogeneity in the growth parameters and compare them to global regression estimates. The results indicate significant heterogeneity in the regression coefficients across the country, most notably for amenities and college graduate shares. Using GWR also exposes significant local variations that are masked by global estimates suggesting limitations of a one-size-fits-all approach to describe growth and to inform public policy. (JEL R11, R23)

Riding the Wave of Urban Growth in the Countryside: Spread, Backwash, or Stagnation?

The advisability of an urban-centered growth strategy to reap the benefits of urban agglomeration economies is much debated. Rural areas benefit when the growth “spreads” to the hinterlands, especially within daily commuting distance. Yet, in distant-peripheral locations, urban growth may create a “backwash” as households relocate to the urban center. This study examines spread vs. backwash, as separate from long-run, distance-from-urban-center trend effects, using a novel Canadian GIS database. The unique nation-wide approach yields a spread and backwash rural-growth topography that varies by distance from the urban center, by urban population vs. income growth, and by size of rural community. (JEL R11, R14)

CAN GEOGRAPHICALLY WEIGHTED REGRESSIONS IMPROVE REGIONAL ANALYSIS AND POLICY MAKING

Policy design in a regional context requires explicit recognition of spatial heterogeneity in community characteristics as well as in the heterogeneity of how these characteristics impact the target variables. By providing only a “global” measure for the entire space, standard approaches such as ordinary least squares or (most) spatial econometric models tend to compromise spatial heterogeneity in favor of average estimates and efficiency. More assessment is needed of whether the gains of simplicity and statistical efficiency offset the losses from ignoring spatial heterogeneity. Using data for about 1,900 rural Canadian communities as a backdrop, the authors address this issue using a geographically weighted regression approach. The authors find that for about two-thirds of the variables, standard approaches would have significantly understated the spatial differences in the impact of selected variables. Standard analysis would not have uncovered this information, suggesting that subsequent policy inferences would be poorly suited to many local settings.

When Spatial Equilibrium Fails: Is Place-Based Policy Second Best?

Tan Y. When spatial equilibrium fails: is place-based policy second best, Regional Studies. Place-based or geographically targeted policy often is promoted to help poor regions. Based on the spatial equilibrium model, economists routinely argue that place-based policies are distortionary and only slow the needed economic adjustments. This paper reviews the empirical evidence about whether the spatial equilibrium model holds in reality and finds that, even in the United States where labour mobility is thought to be much higher than in Europe, at best weak support for the spatial equilibrium hypothesis is found. Although this suggests potential efficacy of place-based policy, the informational and political economy conditions required for place-based policy to be effective are described.

Determinants of Non-Farm Labour Participation Rates Among Farmers in Australia

In recent decades, non‐farm employment has become prevalent and an important source of income for Australian farm families. However, models identifying the relative significance of the socioeconomic variables influencing non‐farm employment participation rates have never been estimated in Australia. In this paper, a bivariate probit model of non‐farm employment participation rates was estimated, using information from the Australian Bureau of Agricultural Resource Economics (ABARE) 1994–1995 surveys. It was found that the participation decision of the farm operator and spouse is likely to be jointly determined, that non‐farm employment participation increased at a declining rate with age among farmers and that university education enhances the participation rates particularly among spouses. Participation rates were also higher among spouses with lower other income and with no dependent children.

Multipliers in a Central Place Hierarchy

Open economy multipliers, at the community level, capture only a portion of the system-wide impact of changes in local autonomous spending. Multiplier effects for the central place system will include the community-specific multiplier, where the autonomous expenditure was initiated, plus all of the cross-community multiplier effects generated through linkages among communities in the hierarchy. Import leakages, in the form of shopping at higher levels, result in “filtering up” of expenditure increases initiated at lower levels of the system. In an earlier paper (Olfert and Stabler 1994), community-level multipliers for a central place system in the Great Plains were estimated. In this paper, the distribution of direct and induced spending, resulting from autonomous spending increases initiated at particular levels of a central place hierarchy, is derived and empirically estimated over all levels of the hierarchy. Building on (1) own-community level multipliers, (2) an exhaustive set of cross-community multipliers are derived and empirically estimated. The combination of own- and cross-community multipliers produces (3) system-wide multipliers that show the system-wide impact of spending initiated at any level in the hierarchy. Finally, (4) level-specific impact multipliers resulting from autonomous spending originating at any (every) level in the system are calculated. Results indicate that the induced impact of autonomous expenditure increases anywhere in the system will be the greatest at the top of the hierarchy, that autonomous increases at higher levels have a larger local impact than they do at lower levels, and that equal expenditure increases across the hierarchy will have a disproportionate impact at the top of the hierarchy, as well, dueto a combination of higher own-community multipliers and spending up the hierarchy by residents of lower level centers.

Places for Place‐Based Policy

Place-based policy is both ubiquitous and widely criticised. The conventional economic case against place-targeted interventions is strong, relegating its application to a narrow range of cases of immobile labour resources, market imperfections and/or other externalities. However, both internationally and domestically, equity considerations lead to policies and programmes for disadvantaged regions and their populations. Budget constraints and accountability suggest a selection or ‘triage’ process targeting places with the highest returns in contributing to social welfare. Furthermore, the challenges facing rural areas may be fundamentally different in developed from developing countries. This article proposes a framework for assessing places appropriate for place-based policies, using the examples of Canada, Chile and Peru.

Regional Market Potential and the Number and Size of Firms: Observations and Evidence from Chile

Abstract This paper investigates the relationship between market potential and the spatial variation in the number and the average size of firms. We adapt the canonical model of the New Economic Geography to demonstrate this relationship and to derive an empirical specification suitable for estimation through dynamic panel techniques. The model is tested against municipal data on the number of firms per adult in Chilean comunas for 2005–2010. Our results confirm that market potential along with place-specific fixed costs play an important role in determining the spatial variation in the number of firms per capita.

Competitive Pressure and Technology Adoption: Evidence from a Policy Reform in Western Canada

We measure the impact of the removal of a railway transportation subsidy on the adoption of technology for Western Canadian farms, using a unique combination of Census and freight rate data. We exploit the large regional variation in these one-time freight rate increases in order to identify causal effects of increased competitive pressure. Using a difference-in-differences methodology we find that higher freights rates – and hence lower farm gate prices – induced farmers to adopt new, more efficient production technology. We also find that farmers experiencing the greatest transportation cost increases also increased fertilizer usage and made significant land use changes.