Modeling Regional Growth Spillovers: An Analysis of Employment Growth, Migration Behavior, Local Public Services and Household Income in Appalachia

In this paper, a spatial simultaneous growth equilibrium model of employment growth, migration behavior, median household income and local public expenditures is developed. The model is empirically estimated by Generalized Spatial Three-Stage Least Squares estimator using count- level data from Appalachia for 1990-2000. The results suggest the existence of interdependence among the growth rates of employment, gross in- and out-migration, median household income and local public services in the form of feedback simultaneities, spatial autoregressive lag and spatial cross-regressive lag simultaneities. The findings also suggest the existence of conditional convergence with respect to endogenous variables of the model. The speed of adjustment for the growth rate of median household income is the fastest and for the growth rate of gross in- migration is the slowest. The findings also indicate the clustering of counties on the basis of their growth rates of median household incomes which would require the need for development policy coordination at the regional level, or the whole of Appalachia. Another key finding of the study is that Appalachian counties with higher initial population sizes were both destinations and sources of migrants during the study period.