Analysis of County Employment and Income Growth in Appalachia : A Spatial Simultaneous-Equations Approach

County median household income and employment growth rates tend to be characterized by spatial interaction. A spatial simultaneous-equations growth equilibrium model was estimated using GS2SLS and GS3SLS. The results indicate strong feedback simultaneity between employment and median household income growth rates. They also show spatial autoregressive lag simultaneity and spatial cross-regressive lag simultaneity with respect to employment and median household income growth rates, as well as spatial correlation in the error terms. Estimates of structural parameters show strong agglomerative effects and significant conditional convergence with respect to employment growth and median household income growth in Appalachia in the 1990s