Entrepreneurial and Wage and Salary Employment Response to Economic Conditions Across the Rural-Urban Continuum

Abstract

In this paper, we explore how national economic trends in a set of industries that compose local economies and growth in nearby metropolitan areas affect local employment growth in different tiers of the urban-rural hierarchy, paying close attention to the effects of urban proximity. The results of our county-level analyses reveal heterogeneous responses. Favorable economic changes due to a fast-growing local industry composition have the largest positive impact on self-employment growth in small metropolitan areas and the smallest positive impact in rural counties. Self-employment in rural counties is fostered by growth in nearby small MSAs and is hampered by growth in nearby large MSAs. In micropolitan counties, there are no significant negative effects, whereas positive (or spread) effects are detected originating only from small and medium MSAs but not from large MSAs. In urban counties, growth in a nearby large MSA is not related to local self-employment growth in the lower tiers of the urban hierarchy