Presented by: Mark D. Partridge Partridge.27@osu ; aede.osu/programs/Swank/

1. POVERTY AND PLACE ACROSS THE UNITED STATES:DO COUNTY GOVERNMENTS MATTER TO THE DISTRIBUTION OF ECONOMIC DISPARITIES? Presented by: Mark D. Partridge Partridge.27@osu.edu; http://aede.osu.edu/programs/Swank/ Coauthors: Linda Lobao, Wilner Jeanty, & David Kraybill Keynote: Poverty and Regional Analysis Workshop 50th Annual Meetings of the Southern Regional Science Association Pre-Conference J. Norman Efferson Series Lecture Louisiana State University February 3, 2011 This research received partial support from NIH award R21-HD47943 to the Initiative in Population Research at The Ohio State University. Partridge--LSU

2. Purpose of the Study • Contribute to the poverty-and-place literature—at the sub-national scale. • First study to question the impacts of counties as local governments: • Are county governments a missing link in this literature? • Do county governments influence local populations’ economic well-being? • Most novel part in my opinion is whether it is ‘good policy’ that matters or “government capacity’ that matters. • Focus on job growth, poverty rates, and household income in the 2001-2007 period. Partridge--LSU

3. Outline of the Presentation I.The poverty-and-place literature and counties II. More interest in local govt role in reducing poverty III. Conceptual debate about the effects of local govts on poverty and other forms of well-being IV. Empirical analysis: • Do county govts influence local well-being? • Focus on county’s institutional capacity and policy initiatives directed to workforce development • National analysis of county govts using secondary data and unique primary survey data •  V. Conclusions Partridge--LSU

4. Spatial Clustering of Poverty • Persistent patterns that is worse near the Delta Partridge--LSU

5. Partridge--LSU

6. Family Poverty (terciles) 1979 1969 1989 1999 Partridge--LSU

7. Family Poverty Clustering (Local Moran’s I) Partridge--LSU

8. I. Poverty across U.S. Localities: Literature • Thematic concern with factors explaining sub-national economic disparity (e.g. poverty rates, income levels, or income inequality) • Common independent variables (see paper for cites): • economic structure (quality & quantity of local employment) • demographic attributes (e.g. age, race/ethnicity, family structure— reflecting vulnerability to poverty) • geographic (agglomeration, regional context)   • Methodological protocols: • counties most commonly used unit-of-analysis • quantitative studies using various regression-type models Partridge--LSU

9. Poverty across U.S. Localities: Literature Common limitations in this literature: Weber et al. (2005); Partridge and Rickman (2006) • Studies vary in degree to which spatial processes incorporated—spatial econometrics, GWR, etc. • Endogeneity and self-sorting are not usually considered. • Relatively little attention to govt, even less to local govt Partridge--LSU

10. Poverty across U.S. Localities: Literature Counties –the empirical sample of choice: Isserman et al. 2009; Peters 2009 mostly fixed geographic boundaries considerable secondary data spatial scale—(incorporates residence and work, most people live and work in the same county) counties include both slow & fast growing (urban/rural) places (Desmet and Fafchamps 2005) Partridge--LSU

11. Local Poverty: The Body of Literature Counties are also important units of govt: Lobao and Kraybill, 2005 • cover more residents than other local governments, such as municipalities • now fastest growing U.S. general purpose government • provide important human services and administer welfare (the TANF program) for many Americans Partridge--LSU

12. Poverty across U.S. Localities: Literature • Why are counties overlooked as units of govt? • Conceptual gaps in the poverty-and-place literature– evolved with a focus on economic and demographic determinants • Federal government receives most attention • War on Poverty most vivid example • Americans see the “state” as the federal state • Sheingate (2010); (Peterson 1981) • Lack of countygov’tdata (Weber et al., 2005) Partridge--LSU

13. II. More Interest in Local Gov’t Role in Reducing Poverty • Policy interest in local govts from both right and left sides of political spectrum • The role for local govts to help reduce poverty has gained traction with greater interest in “social capital” • Decentralization has increased the functional responsibilities of local govts. Rodriguez-Pose and Gil (2005) • New policy-experiments undertaken by local govts • “Place-based” poverty policy increasingly recognized by some as an important adjunct to “people-based” policy. Partridge and Rickman (2005, 2006) Partridge--LSU

14. III. Local Govt and Economic Well-Being: Differing Views The Case for the Beneficial Effects of Local Govt • Govt has a role in society beyond providing “pure” public goods, e.g., greater economic growth and reducing poverty. Bartik (1991); Lobao and Hooks, (2003); Volscho and Fullerton (2005) 1. The Institutional Capacity of Local Government • Government provides two overlapping functions: • --an economic growth function (job creation) • -- a social equity function: strengthens the local social safety net, protects residents from destabilizing market forces • Where govt is institutionally stronger (i.e., with greater bureaucratic and fiscal capacity to operate effectively), its beneficial influence is greater • poverty should be lower and household income higher. Lobao and Hooks 2003 Partridge--LSU

15. III. Local Govt and Economic Well-Being: Differing Views The Case for the Beneficial Effects of Local Govt 2. Specific Policies and Programs of Local Govt • Tiebout’s (1956); Rodriguez-Pose and Kroijer (2009) • Economic development programs aimed to localbusiness and public services directed to the local labor force • Successful economic development programs should create jobs, in turn, raising family incomes, and reducing poverty • Programs directed to community workforce: can build human capital, promote family well-being, increase community cohesion, and reduce poverty (e.g., transportation and childcare) (Blank 2005). Partridge--LSU

16. III. Local Govt and Economic Well-Being: Differing Views The Case for Null or Negative Effects of Local Govt • Researchers build their arguments from one of two vantage points, grounded in policy-schools from the right and the left. A. The limited-govt view– sees market and state as intrinsically competitive, emphasizes govt failures, see Okun, (1975); Buchanan, (1986) • As local govts expand institutionally beyond providing true public goods and to undertaking social equity functions, they adversely affect local culture and labor supply and can turn localities into welfare magnets (e.g. Murray 1984). • Programs directed to low-income people are particularly misdirected in catering to underperforming/undeserving populations, which over the long term undercuts growth. Partridge--LSU

17. III. Local Govt and Economic Well-Being: Differing Views The Case for Null or Negative Effects of Local Govt B. Critical political economy literature view of local govt • Recognizes govt as an important institution for ensuring well-being and alleviating poverty but stresses the inadequacies of local govts. • Critique leveled against devolution of federal welfare (TANF)/social programs to program to states and counties. (Schram 1999) • Also critique leveled against local economic development programs directed to business—local elites rather than low-income people capture any gains (Storper and Manville, 1986; Urban Studies) Partridge--LSU

18. III. Local Govt and Economic Well-Being: Differing Views In sum, we test two opposing hypotheses for county govts: Benefits of county government Where county govt is larger and institutionally stronger (i.e., with greater bureaucratic & fiscal capacity), its beneficial influence is greater—greater job growth & income & lower poverty rates. County-govt programs directed to business and to the community workforce should be related to greater job growth, lower poverty, and higher household incomes. Related Hypothesis: Is it Policy or Govt Capacity that matters? Limitations of county government County govts capacity and programs have at best no effects --at worst, detrimental effects on job growth, poverty rates, and household income. Partridge--LSU

19. IV. Empirical Analysis • Data: Counties from all 46 contiguous states with functioning county govts, primary data collected from 62% of counties, along with secondary data (N=1514) • Modeling Relationships follows poverty literature • Control for spatial dependency with a spatial lag model in a GMM approach. • Models seek to minimize endogeneity (e.g. job growth estimated with instrumental variable, industry mix) Partridge--LSU

20. IV. Empirical Analysis • Modeling Relationships • Examine four indicators of economic well-being: • job growth (2001-2007) • individual poverty rate (2007) • poverty rate of children under age 18 (2007) • household median income (2007) • Base models—robustness checks • Standard diagnostics (no high multicollinearity, etc.) Partridge--LSU

21. 2007 Poverty Rate by County Partridge--LSU

22. IV. Empirical Analysis • Independent Variables (base-model controls for county conditions) • 1.Local Economic Structure (1990s) • Percent manufacturing • Average job growth of contiguous counties – • Government as a local employer (federal, state, and local) • 2. County Demographic Characteristics(1990s) • Percent of population: < age 18 and age 65 years and > • Percent of black and Latino populations • Education: age 25 with a college degree or + • % Female-headed households with children under age 18 • 3. Agglomeration • Log of population density • Distance to nearest MSA in 2000 • Poverty pocket: percent of 8 nearest counties with 1997 poverty rate > 20% • County 2000 population if county is in an MSA or nearest MSA otherwise. • Distance to reach a large MSA (population at least 250,000) Partridge--LSU

23. IV. Empirical Analysis • Dependent County Govt Variables: County Capacity • Administrative resources: • --County government size (full-time employees) • --Economic development professional on staff • --Grant writer on staff • Fiscal resources: • --General revenue/general expenditures (higher=greater fiscal capacity) • --Revenue per capita • Decentralization—county autonomy: • --State and federal/own source revenue (lower=greater fiscal autonomy) • --# of governments operating in county (lower=less fragmentation, stronger county) • --Devolution—county located in state that devolves welfare to counties Partridge--LSU

24. IV. Empirical Analysis • Dependent Variables: County Government Policy • Three Contrasting Types of Development Policy that are debated • --Traditional business attraction:(7 policy tools, e. g. tax abatements) • --Alternative (new wave) business economic development: (8 policy tools, e.g. business incubators, new technologies) • --Programs directed to local workforce: (10 item community support index e.g., workforce development programs for low-income workers, childcare services) • Additional Measures: County Economic Development Focus • --Business incentives (13 incentives, e.g. local designated enterprise zones, low-cost loans) • --Proportion of economic development budget for small business development (index) • --County-created industrial park Partridge--LSU

25. IV. Empirical Analysis: Results • Job Growth: is positively associated with: • County government capacity is larger: • Larger governments • More centralized county govts (less fragmented by many local govts) • More autonomous (less dependence on state and federal funds) • These findings tend to support the position outlined about beneficial effects of stronger county govts. • Note: higher revenue extracted per capita, lower job growth (suggests taxation dampers growth) • Policy: • Where a larger number of new wave policies are in use-- providing an indication they may support job growth. • But where the county provides fewer public services for the workforce • Note: no effects of: traditional, business attraction; industrial incentives; industrial park; or spending focused on small business development Partridge--LSU

26. IV. Empirical Analysis: Results • General Poverty Rate are negatively related to: • Capacity is greater: • Staff: economic development professional on staff • Fiscal capacity: higher per capita revenue (control for economic structure) • Greater autonomy: less dependence on state/federal funds; welfare devolved to county • These findings tend to support the position outlined about beneficial effects of stronger county govts. • Little effect of policy: • Except a somewhat positive effect of new wave policies (p <.10)– new wave policies are associated with higher poverty rates. • As expected, job growth is related to lower poverty rates and there a geographical spillovers. (IV) Partridge--LSU

27. IV. Empirical Analysis: Results • Child Poverty Rate is negatively related to: • Capacity is greater: (similar to previous general poverty rate model) • Staff: economic development professional on staff (p<.10) • Fiscal capacity: higher per capita revenue • Greater autonomy: less dependence on state/federal funds; welfare devolved to county • These findings tend to support position outlined about beneficial effects of stronger county govts. • Little effects of any policy—New wave policies are positively related to child poverty rates. • Job growth is related to lower child poverty rates with a magnitude that is 1.5 x greater than overall poverty. Jobs are even better for children! Partridge--LSU

28. IV. Empirical Analysis: Results • Median Household Income is positively related to: • Capacity is greater: • Fiscal capacity: higher per capita revenue • More autonomous govt: less dependence on state/federal funds • Tends to supports position outlined about beneficial effects of stronger county govts. • Effects of policy: • Workforce services are related to higher median household income • By contrast, a weak negative effect of incentive policies directed to local business (controlling for job growth) • Fewer new wave policies are associated with higher income (p <.10). • Counties without a county-created industrial park have higher income. • Job growth is related to higher household income. Partridge--LSU

29. V. Conclusions • First to examine county units of govts on economic outcomes. • Conceptually evaluate county performance, we contrast two social science positions about local govts. --1st argues local govts can improve economy if they have strong institutional capacity and deploy specific policies. --2nd challenges this view. •  More support for the first position---particularly with capacity variables. • This suggests that social scientists may be overemphasizing identifying perfect policy and not enough emphasis on the ‘competence’ of govt to carry out policy. • County govts appear to make a difference—larger, more autonomous govts related to lower poverty. Partridge--LSU

30. V. Conclusions • Welfare devolution to counties tends to be associated with lower poverty rates. • County economic development policy—little effect (no effect of business attraction). • Job growth is related to higher income and lower poverty—need effective policies to stimulate job growth. • Social scientists should re-think their treatment of “counties” in research on poverty-and-place Partridge--LSU

31. Standard errors in parentheses; *p < 0.10, **p < 0.05, ***p < 0.01 1: Variance ratio: predicted to observed values of the dependent variable 2: Square of the correlation between observed and predicted values of the dependent variable 3: Wald test for Rho=0

34. Standard errors in parentheses; *p < 0.10, **p < 0.05, ***p < 0.01 1: Variance ratio: predicted to observed values of the dependent variable 2: Square of the correlation between observed and predicted values of the dependent variable 3: Wald test for Rho=0

37. Standard errors in parentheses; *p < 0.10, **p < 0.05, ***p < 0.01 1: Variance ratio: predicted to observed values of the dependent variable 2: Square of the correlation between observed and predicted values of the dependent variable 3: Wald test for Rho=0

40. Standard errors in parentheses; *p < 0.10, **p < 0.05, ***p < 0.01 1: Variance ratio: predicted to observed values of the dependent variable 2: Square of the correlation between observed and predicted values of the dependent variable 3: Wald test for Rho=0