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The Geography of American Despair and Declining Economic Opportunity
Saturday, Jan. 6, 2018
10:15 AM - 12:15 PM
Agricultural and Applied Economics Association
Ohio State University
Wage and Employment Growth in America's Drug Epidemic: Is All Growth Created Equal?
The rise in drug overdose deaths in the United States since the turn of the millennium has been extraordinary. Changes in the medical profession’s view of prescription opioids have dramatically increased the availability of potent drugs, but concurrent increases in suicides and liver disease suggest a demand element to the crisis. In particular, drug overdoses are heavily concentrated among those with a high school degree or less, a population that has seen its declines in economic opportunity, physical heath, and relationships in recent decades (Case and Deaton 2017). Some evidence exists linking employment to despair deaths (Hollingsworth 2016; Pierce and Schott 2016). We further this literature by examining the role of wages in addition to employment and decompose employment and wage growth across high-, medium-, and low-paying industry tiers to identify heterogeneous employment and wage growth effects on overdose rates within nonmetro and metro counties. We find significant variation in the effect of employment and wage growth rates on drug overdose death rates at different points on the industry wage distribution. In general, we find that changes in wage growth rates—and in particular bottom-tier wage growth rates—are more important than employment growth rates for nonmetro counties. Changes in both employment and wage growth rates are important for metro counties, but the effects are strongest for bottom-tier employment growth and top-tier wage growth. Lastly, we find effects differ between male and female overdose death rates and black and white rates.
Explaining Spatial Disparities in Drug Overdoses, 1989-2014
Rising death rates associated with drug overdoses have become a prominent public policy concern. A widely held belief is that increases in these deaths are the result of declining economic opportunities and general hopelessness about the future in many communities, especially those that are rural. In this paper, we identify explanatory factors associated with deaths from drug poisonings, which include prescription drugs, opioids and both intentional and unintentional deaths associated with drug overdoses in general. We present a series of maps over time to help visualize the changing spatial disparities in overdoses over time. Our data panel includes approximately 65,000 observations across U.S. counties and over time. We employ a fixed effects panel data model to estimate the effects of socioeconomic conditions on drug overdoses in counties over the period 1989-2014. In addition to conventional economic measures such as unemployment and poverty rates, we include employment change in the preceding year to assess the role of economic conditions in drug overdoses. Our model also controls for sectoral employment to examine if workers in some industries and the self-employed are more vulnerable to overdoses, as well as the cumulative number of presidentially-declared natural disasters in the county since 1959. Our (preliminary) results suggest that population density as well as services sector and self-employment, but not agricultural, manufacturing or mining employment, are associated with higher death rates from drug overdoses. In addition, a legacy of natural disasters has a statistically significant positive effect, and the population aged 15-24 years appears to be especially vulnerable to drug overdoses.
Economic Distress and Labor Market Participation
Many of the most deeply and persistently distressed regions of the U.S., such as parts of West Virginia, suffer from extremely low levels of labor force participation. These are regions where economic despair seems to have taken hold for generations and which face numerous other impediments to economic prosperity, such as opioid abuse. Better understanding these linkages can lead to policy solutions to help the most disadvantaged places break the cycle of economic despair. Using county-level data, we begin by estimating a series of models that allow us to understand the drivers of local labor force participation. We also consider how these drivers may differ between rural and urban areas. We then analyze how levels of participation in the labor force are related to other measures of economic distress. We find that there is significant variation in the drivers of rural and urban labor force participation; however, much of the variation can be explained by known factors. Yet, our results also suggest that there remains some portion of the lower levels of labor force participation in West Virginia and Appalachia that cannot be explained by other factors. Since it appears that labor force participation is important to explaining higher levels of employment growth in rural areas, for persistently distressed regions, finding ways to increase labor force participation may be a critical step toward increasing economic prosperity.
Road to Despair and the Geography of the America Left Behind
The United States has always experienced spatial differentials in economic activity and wellbeing. Yet, a long-running force that mitigated these disparities was economic convergence. However, beginning in the 1980s, such convergence forces weakened and economic activity and well-being began to widely diverge. In particular, in the wake of the Great Recession, this divergence is increasingly leading to large regions that appear to be left behind. This study will assess economic conditions in the 21th century by splitting the time periods before and after the Great Recession in appraising the causes for the post-recession decline in economic activity in these “forgotten” places. The analysis will occur over the 2001-2016 period using metropolitan and nonmetropolitan county-level data. We ask whether these distressed places are simply suffering from continued deindustrialization hitting manufacturing and (coal) mining-dependent locations, or is it more related to the occupational mix, human capital, and lack of entrepreneurial conditions that mean that struggling communities lack the basic foundation and resilience to adjust to adverse economic shocks? Likewise, some of these disadvantages may relate to long-term issues related to remoteness and the lack of agglomeration economies that will be extremely difficult to address through public policy. The economic outcomes that will be examined will focus on job growth, but there will also be some assessment of health outcomes, poverty rates, inequality, median household income, and average wages to further address issues of well-being.