The Impact of Agricultural Growth on Rural Non-Farm Incomes and Employment in Alabama

The rural nonfarm economy is the backbone of the economy of numerous small towns scattered throughout the Black Belt region, as well as the primary source of income and employment. Seen in this light, the rural nonfarm economy will play a key role in determining future prospects for employment growth and poverty alleviation in the Alabama Black Belt region. The objective in this paper therefore is to examine the importance of rural-urban growth linkages with a focus on the Black Belt region and estimate agricultural growth multipliers. The analysis uses cross-section data to estimate econometrically the indirect rural employment and income generated by agricultural growth. Two major sections address the study objective. The first examines the importance, composition and location of nonfarm activity, as well as general trends over the past decades. After reviewing previous growth linkage studies, the second section explores the relationship between agriculture and changes in nonfarm activities.