Rural agglomeration : how does the distribution of people across rural America affect entrepreneurship?

Abstract

Where people live affects a region's economy. Urban economists have long analyzed the effects of large and densely settled regions -- urban agglomerations -- on the local economy, finding that people and businesses in these places tend to benefit from low transportation costs, access to large labor and consumer markets, and knowledge spillovers. In this context, rural areas are largely considered to be the sparsely populated 'other' however, our experiences suggest that population distribution varies across rural America, with people in some rural regions densely clustered in small towns while people in other regions are thinly spread across the countryside. In this study, I develop a measure of the rural population distribution -- rural agglomeration -- and test its explanatory power in a regional entrepreneurship model to determine if rural counties where population is more clustered in towns benefit from the effects of dense settlement patterns described in the urban economics literature. This study contributes to the existing literature on entrepreneurship and regional economic development by applying the agglomeration economies concept to a rural context. Rural agglomeration is a new way to characterize rural regions and it may have important policy implications for rural businesses, infrastructure (e.g., broadband), and services (e.g., public education and healthcare).