ABSTRACT
Rural economic structure in many parts of the United States has undergone significant changes over the past two decades. Traditional goods-producing sectors such as agriculture and manufacturing are giving way to serviceproducing sectors, such as those that support natural resource-based leisure activities. As America becomes more urban the resources that rural areas offer, like open space, natural amenities, and “small town values,” become more valuable. Increasingly, people appear to be placing greater value on natural resource-based amenities and related attributes that contribute to regional quality of life. One behavioral manifestation has been a willingness to relocate to experience these attributes. Indeed, many researchers, such as Howe, McMahon, and Propst, conclude that Americans are moving to rural areas in search of amenity attributes to improve their quality of life. Numerous studies have documented that quality of life plays an increasingly important role in community economic growth (Dissart and Deller, Halstead and Deller, Rudzitis). In a detailed review of the literature, Gottlieb suggests that the argument for using amenity attributes as an economic growth tool appears powerful. Even if such a strategy fails to create additional job and income growth, constituents presumably would benefit. Concern has been expressed, however, that such changes may yield higher levels of local underemployment, lower income levels, and generally lower overall economic well-being (Marcouiller and Deller). There is a perception that substituting traditional jobs in resource extractive industries and manufacturing with more service oriented jobs yields inferior earnings power, benefits, and advancement potential. While shifts from market-based (e.g., extractive and manufacturing) activities to non-market-based (e.g., recreation and retirement) activities are well documented in the rural economic growth literature (e.g., Mills, Walzer and Deller), the impact of this shift on the structure of regional economies and the well-being of rural residents is not well understood. A fundamental reason for the limitation of the current literature, and subsequent policy discussions, hinges on the fact that amenity attributes are latent non-market inputs into the production processes of local economies (Marcouiller). For example, forest resources once viewed as a source of raw materials for wood products are now valued for their recreational uses or as aesthetic backdrops for homeowners. Unfortunately, the current
methods of modeling regional economic structural change and growth fail to capture these non-market attributes of the rural natural resource base (Marcouiller and Deller). The intent of this research is to expand our understanding of the nature and extent of economic structural changes in the rural United States with a particular focus on the role of non-market amenity attributes. Two overriding goals include: (1) the construction of a family of consistent measures of amenities and quality of life and (2) the determination of the role of amenity and quality of life attributes in regional economic growth. We utilize a modified version of the widely used Carlino and Mills model of regional economic growth to test our hypotheses. Data for the analysis are for 2243 non-metropolitan U.S. counties and come from a range of sources including BEA-REIS, City and County Data Book, and the NORSIS data set maintained by the USDA Forest Service. This chapter is composed of six sections beyond the introduction. In the next section we provide an overview of the current thinking about the role of amenity attributes in rural economic growth. We then propose a structural model of growth. Following the next section, we outline our approach to defining and constructing amenity attribute measures. The empirical specification of the model is then laid out and our empirical results are discussed. The article closes with a summary and review of policy implications.
