Does Place Still Matter? Accounting for Income Variation Across American Indian Tribal Areas

Abstract

Persistent poverty is frequently identified as a key problem on American Indian tribal lands in the United States. Yet the fact that tribal lands tend to be located in isolated, nonmetropolitan areas suggests that relatively lower levels of per capita income in tribal areas may be due largely to locational factors, such as the lack of access to markets, the absence of agglomeration economies, and an inadequate infrastructure. The study presented here explored the role of location-specific factors and other characteristics in accounting for variation in income levels between tribal and nontribal areas and across different types of tribal areas. The results suggest that location indeed plays a significant role in accounting for variation in income across both tribal and nontribal areas, but that human capital, demographics, and structural factors also matter. In particular, college-educated and retirement-age shares of the population have a positive effect on income levels in all areas, while unemployment rates and shares of the population that are American Indian have a negative effect in all areas. The results further indicate that once locational, structural, and demographic factors are controlled, tribal areas do not have significantly lower levels of income than do other areas. The lower income levels found in tribal areas may thus be understood as a function of location, industrial structure, human capital, and demographics, rather than as a reflection of problems that are inherent only in tribal areas.