THE URBAN TO RURAL SHIFT IN MANUFACTURING EMPLOYMENT: A TEST OF ALTERNATIVE THEORIES

The plight of American agriculture has caused widespread economic difficulties in the nation's rural areas and small towns. As a result, these communities have sought, and are seeking, to develop their industrial sectors by attracting urban manufacturers. Manufacturing firms can often find a comparative advantage in rural areas due to the availability of low cost labor or Inexpensive real estate for plant expansion. To determine which manufacturers, and the characteristics of manufacturers, that have decentralized employment an ordinary least squares regression analysis was used. It was found that manufacturing had decentralized employment for reasons of both labor cost minization and for reasons of plant expansion. Therefore, rural communities having a comparative advantage in either land or labor will be able to attract manufacturing industries.

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