Project Number: WVA00409
CRIS Number: 0182649
Policy Implications of Changes in Rural Employment, Poverty and Income Distribution in West Virginia
Investigators: Gebremedhin, T. G., Smith, D. K., Schaeffer, P. V.
Performing Department: Resource Management -- 8485
Start Date: 10/01/1999
Termination Date: 09/30/2004
Reporting period: 01/01/2001 to 12/31/2001
Progress Report:
Previous studies established that regional income divergence occurred in the 1980s, using either per capita personal income or per capita earnings as the measure of regional income. According to previous studies cross-section results support the convergence hypothesis, while time series were ambivalent implying that there was no sigma-convergence during the 1969 and 1984 period, but the results showed sigma-convergence during the 1984-1998 period. The main objective of this study was then to examine the distribution of per capita incomes among the study areas: the southern and Eastern Panhandle counties. Both cross-section and time series data are used to test whether the patterns of per capita real income across the southern and Eastern Panhandle regions of West Virginia are consistent with the convergence hypothesis. The study used inflation-adjusted per capita household income as reported by the US Census of Population because the data are available for both regions and because the statistics provide a measure of changes in living standards for typical American households over time. The secondary data used were obtained from the Bureau of Business and Economic Research and the Regional Economic Information System. Several approaches of examining convergence are used: sigma-convergence test, correlation analysis, F-test for convergence, time series analysis and beta-convergence test. First, the results concurred with the conclusions reached by previous studies that divergence in the 1970s replaced the convergence that was observed in earlier decades. Second, the results showed that the gap in per capita real income between the southern and Eastern Panhandle counties had narrowed after the 1960s. Third, the results suggest that the rate of migration and the employment structure of the regions influenced the speed of convergence in per capita real income. Fourth, the data revealed that before the 1980s average per capita real incomes in the southern counties were higher than average per capita real incomes in the Eastern Panhandle counties. However, this trend was reversed during the 1980s. Lastly, the findings showed that there is a wider dispersion in personal disposable income across the counties than in personal income per capita and personal income minus government transfers. The results suggest that the effects of factor mobility and relocation of firms on the convergence process might have reached their limits in reducing regional disparities.
Publications:
Bukenya, J, T. Gebremedhin and P. Schaeffer. 2001. Quality of Life Satisfactions: A Comparative Survey Analysis of Eastern Panhandle and Southern West Virginia Counties. A Working Paper #2001-20, Regional Science Institute, West Virginia University.
Bukenya, J. and T. Gebremedhin. 2001. An Analysis of Regional Disparities and Income Convergence in West Virginia. A selected paper Abstract, p.18, compiled by J. Outlaw, D. Anderson and J. Albert, Southern Agricultural Economics Association.
Gebremedhin T., S. Desousa, P. Schaeffer, D. Smith and D. Colyer. 2001. An Analysis of the Relationships of Income Inequality and Poverty in West Virginia. A selected paper Abstract, AAEA on-line Annual Report, 2000-2001 http:www.aaa.org/fund/docs/annualreport01.cfm#abstracts
Impact:
Reductions in personal direct taxes, and increases in government transfers and, possibly, other government assistance programs are the alternative tools for use by policy makers to further close regional gaps in income disparities.