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Growth in metropolitan and nonmetropolitan areas: an update.

ECONOMIC and demographic growth rate differences between U.S. metropolitan (metro) statistical areas and nonmetropolitan (nonmetro) areas continued to widen as the 1980's progressed. On the basis of estimates through 1987, the amount by which metro growth rates exceeded nonmetro growth rates was larger and the difference more regionally pervasive than reported in two previous articles, which tracked the turnaround from the patterns of the 1970's and the apparent restoration of pre-1970's trends.'

The earlier articles also critiqued competing hypotheses that purported to explain the shifts between the urbanization that characterized the population and industrial location patterns of the pre-1970's and the counterurbanization of the 1970's. This update, using estimates through 1987, compares the 1980's with the 1970's and, with the introduction of employment data, summarizes the principal industrial developments underlying the shifting patterns.

Four aggregates are presented in table 1: Total personal income, total population, total earnings, and total employment.' Population and personal income are measured by place of residence, whereas earnings and employment are measured by place of employment. For any individual, the place of residence may or may not correspond to the place of employment; that is, persons may reside in one county and commute to work in another-more frequently from nonmetro to metro areas than the reverse.

In the 1980's, the average annual growth rates of all four aggregates in metro areas exceeded those in nonmetro areas nationally and regionally, except for New England. In New England, all aggregates but total earnings grew faster in nonmetro areas. In the 1970's, growth rates in nonmetro areas of all aggregates but total employment exceeded those in metro areas nationally and in the four more urbanized regions-New England, Mideast, Great Lakes, and Far West. Metro area growth rates in both decades continued to exceed nonmetro growth rates in the four less urbanized regions-plains, Southeast, Southwest, and Rocky Mountain.

Increasingly, the prime mover in the fortunes of metro areas is the concentration and growth of higher paid jobs-particularly in the financial, professional, and business services industries. It explains much of the relative improvement experienced by metro areas in three of the four more urbanized regions in the 1980's. It also explains the exception of the higher relative growth rate for the earnings aggregate in the New England metro areas. Further, it helps explain the continued relative advantage of metro areas in the four less urbanized regions.

The relatively advantageous growth experience of nonmetro areas in the 1970's resulted from a continuation of trends and from transitory economic developments. The geographic dispersion of manufacturing jobs out of the metro areas in the Northeast-Great Lakes manufacturing belt is an example of these trends. Soaring primary commodity prices in the early 1970's exemplify a more transitory development. The product of trends and transitory developments explains why the employment aggregate was the one exception to the nonmetro growth advantage in the 1970's and why that advantage with respect to the other aggregates was lost in the 1980's.

Much of the primary commodities production concentrated in nonmetro areas-particularly in the less urbanized regions-is characterized by relative price inelasticity of demand. Thus, prices and incomes tend to be more volatile than employment with resped to such commodities. In the early 1970's, supply shocks led to soaring petroleum, grain, and oilseed prices, and hoarding led to soaring prices for copper and other industrial raw materials perceived to be in short supply. The initial supply response slowed the decades-long attrition of farm households and turned around the long-term decline in jobs in a number of mining industries in nonmetro areas. A construction boom that attended the rising incomes further raised nonmetro employment. However, that increase was not quite as large as the increase in metro employment, which benefited from the provision of services and construction to the favored nonmetro areas.

Speculative excesses implied by booms tend to result in collapsing prices subsequently, particularly when monetary policy tums disinflationary, as it did in the early 1980's. Farm areas, particularly in the Plains, were the first to be hit with falling product prices and asset values. Farm households faced insupportable debt burdens, and attrition rates resumed their pre-1970's trends in the 1980's. Nonpetroleum mining areas were also hit early. The deep coal mining industry, for example, rapidly introduced technological improvements, particularly in the nonmetro areas of interior southeastern States, to contain costs. Thus far in the 1980's, bituminous coal production increased about 40 percent, while employment fell, similarly, by about 40 percent.

The petroleum-based economies in the Southwest and Rocky Mountain regions extended their very rapid growth rates into the early 1980's because of a second oil price shock associated with the outbreak of war in the Persian Gulf area. Speculative excesses amplified the construction boom in metro and in nonmetro areas through mid-decade. The collapse in petroleum prices in 1986 resulted in a steep decline in oil exploration and development in nonmetro areas and in declining construction employment in the metro and nonmetro areas of these regions.

Manufacturing employment, once the governing source of growth for most metro areas, no longer plays that role except in a few areas where new products are developed or during production startups in aerospace and defense industries. Government, services, and headquarters operations increasingly account for the growth of metro areas. At the same time, advances in telecommunications increasingly allow for the negation of the old paradigm for many services-location of their production in the vicinity of consumption.
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Author:Garnick, Daniel H.
Publication:Survey of Current Business
Date:Apr 1, 1989
Previous Article:Per capita personal income: continued widening of regional differences in 1988.
Next Article:County and metropolitan area personal income, 1985-87.

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