Local Labor Market Conditions and the Jobless Poor: How Much Does Local Job Growth Help in Rural Areas?

By Davis, Elizabeth E.; Connolly, Laura S. et al. | Journal of Agricultural and Resource Economics, December 2003 | Go to article overview

Local Labor Market Conditions and the Jobless Poor: How Much Does Local Job Growth Help in Rural Areas?


Davis, Elizabeth E., Connolly, Laura S., Weber, Bruce A., Journal of Agricultural and Resource Economics


The employment outcomes of a group of jobless poor Oregonians are tracked in order to analyze the relative importance of local labor market conditions on their employment outcomes. Local job growth increases the probability that a jobless poor adult will get a job and shortens the length of time until she finds a job. After accounting for both the effects of personal demographic characteristics and local job growth, there is little evidence that the probability of employment or the duration of joblessness differs in rural compared with urban areas.

Key words: employment, local labor markets, rural labor markets, rural poverty, unemployment, welfare reform

Jobless workers often face bleaker prospects in rural than in urban labor markets. Although the employment growth rate was lower and the unemployment rate higher in metropolitan than in nonmetropolitan areas in the early 1990s, unemployment and underemployment rates have historically been higher in nonmetro areas, and average earnings have been lower [U.S. Department of Agriculture/Economic Research Service (USDA/ERS); Gibbs; Findeis and Jensen; Mills 2001]. These differences may be due to both the different characteristics of the labor forces and the different types of jobs available in metro and nonmetro areas. Rural adults have lower average levels of formal education than urban adults, for example, and employment in rural areas is more concentrated in minimum wage and part-time jobs and more likely to involve routine work (Duncan, Whitener, and Weber).

Economic growth, particularly growth in jobs, has been found to improve the well-being of economically disadvantaged groups. Strong local labor demand has been shown to provide significant benefits to disadvantaged groups in metropolitan areas (Bartik 1991, 1996; Freeman and Rodgers; Cain and Finnie). Job growth may be less effective, however, in providing employment for the jobless rural poor. This could be because the jobless rural poor have individual attributes that make them less productive employees, such as lower levels of formal education. Job growth also may be less effective in providing employment in rural areas due to structural differences in employment opportunities or in work supports. Child care and transportation may be less available in rural locations, affecting the ability or willingness of the jobless poor to respond to employment opportunities.

The employment opportunities themselves may also differ, because the jobs created in rural areas may not match well with the skills of the rural jobless poor. Most importantly, the effectiveness of job growth in providing employment for the jobless rural poor could be limited by the low spatial densities in rural employment. Job search may take longer and the probability of getting a job may be lower in rural areas because lower density of employment lowers the likelihood of receiving a job offer within a given commuting radius (Mills 2001).

Recent changes in social policy have increased the importance of workforce attachment and earnings in providing income for the poor, and have given states and localities more flexibility in designing workforce and income support policies for low-income people. These changes increase the importance of understanding the role of local labor markets in providing jobs for the poor. Given the historical rural disadvantage in labor market outcomes, recent policy changes also raise the prospect that rural low-income people will be further "left behind" and benefit less from local job growth and development efforts.

In this study, the determinants of success in getting a job for the jobless poor in Oregon are investigated, focusing on the role of local labor market conditions in rural and urban areas. Two questions are posed. First, how important is local job growth in determining the employment success of the jobless poor? And second, is local job growth less effective in improving employment outcomes in rural than in urban labor markets?

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