Metropolitan Spillover Effects and Economic Growth of Non-Metropolitan Areas: Evidence from Indiana Counties

Abstract

<p>This paper examines the importance of metropolitan spillover effects on the economic growth of non-metropolitan counties in the state of Indiana by using panel data from 2003 to 2013. I hypothesize that metro economic size and non-metro counties’ locations, along with other metro social and economic factors, will have significant impact on non-metro counties’ economic growth. Based on the results from the Random-effects Generalized Least Squares (GLS) and the population-averaged Generalized Estimating Equations (GEE) regressions, metro GDP and population have significant, positive impacts on non-metro counties’ economic growth, while non-metro counties’ locations (i.e., the distance to a metro county), metro K-12 school enrollment, the wage gap and the number of commuters between metro and non-metro areas have significant, negative effects on the economic growth of non-metro counties in Indiana. Some of the dummy variables also showed significant association with the non-metro counties’ economic well-being.</p>