Progress Report for NE-162

Pennsylvania State University

Progress:

Research continued on the effects of economic change and policy on communities, households and individuals in rural America. Progress included: (1) further development of the CIM-PSU impact model to assess impacts of economic change and policy at the local level in addition to the county level, (2) analysis of the effects of social capital on economic growth, (3) the effects of welfare reform legislation (PRWORA) on rural low-income families, and (4) agricultural employment adjustments to economic change, including both farm household labor and hired farm labor. The extension of the CIM-PSU impact model to the local level allows more accurate estimates of the overall effects of change on rural communities. The effect of social capital on economic growth is being analyzed using linear regression analysis and U.S. county-level data. Results reveal that social capital has a statistically significant independent positive effect on the rate of income growth in a county. The effects of economic change on households, families and individuals are being assessed using both national data and farm household data collected in Pennsylvania. The impacts of welfare reform on rural areas are being assessed using the March Current Population Survey (CPS), with past work on underemployment studied at the individual level being extended to the family level. The impacts of economic change on farm households and hired farm labor are being analyzed using the Current Population Survey, the National Agricultural Workers Survey (NAWS) and a panel of data collected from farm households in Pennsylvania. Results using CPS data for 1977-98 show that demographic characteristics are of key importance to the decisions to work off-farm and to exit farming, with farm policy variables less important than might have been expected relative to the off-farm work decision. Changes in local economic conditions in addition to the off-farm wage are also shown to have statistically significant effects on off-farm work behaviors.

Impacts:

The results of this research will benefit rural households and communities trying to adjust to economic change. This includes agricultural households that are adjusting to changes in farm policy, changes in the demographic composition of farm households and shortages of labor to work on-farm. Research on the effects of social capital and changes in the CIM-PSU model will benefit rural communities both in Pennsylvania and throughout the U.S.

Publications:

Corsi, Alessandro, and Jill L. Findeis. 2000. “True State Dependence and Heterogeneity in Off-farm Labour Participation.” European Review of Agricultural Economics 27(2):127-151.

Goetz, Stephan J. and David L. Debertin. 2000. “Why Farmers Quit: A County-Level Analysis,” abstract in Agricultural and Resource Economics Review 26(2):255.

Rupasingha, Anil, Stephan J. Goetz and David Freshwater. 2000. “Social Capital and Economic Growth: A County-Level Analysis,” Journal of Agricultural and Applied Economics, 32(3):565-72.

Oluwole, Tokumbo. 2000. An Econometric Analysis of Off-farm Labor Participation and Farm Exit Decisions Among Farm Families, 1977-1998. M.S. thesis in Agricultural Economics, The Pennsylvania State University, Department of Agricultural Economics and Rural Sociology.