Analysis of Non-Farm Employment Growth in Alabama

Abstract

Aims: The paper examines the economic linkages between rural farm and rural non-farm sectors in Alabama. Because growing land scarcity and land conversation pressure from urban development raises concerns about prospects for rural labor absorption, the paper highlights the impact of agricultural growth on rural nonfarm employment. Study Design: Cross-section study. Place and Duration of Study: Alabama counties, 2001 - 2007. Methodology: The analysis employs cross-section county-level data to test the null hypothesis of no significant relationship between agricultural and non-agricultural employment growth in Alabama. The hypothesis is tested using instrumental variables approach. Results: The key findings suggest that growth of the rural agricultural employment sector positively influences growth in the non-agricultural employment sector. The average multiplier was estimated at 1.10 percent, implying that one percent growth of the rural agricultural sector induces 1.10 percent growth of the non-agricultural sector in Alabama. Conclusion: The results support the conclusion reached by previous studies that although agriculture continues to play a central role in rural development, the promotion of complementary engines of rural growth is of paramount importance.