Regional economic tightness from rural to urban regions

Abstract

Regional economies are characterized by networks of interactions between individual elements and are thus quintessential complex systems. Analyzing the relatedness of various aspects of regional economies, such as exports, industries, occupations, and technologies, using methods from complexity science is becoming commonplace. However, current work has focused nearly exclusively on regional economic complexity of more urbanized regions within countries, if not entire countries themselves. Smaller urban areas are typically over-looked and rural regions are almost entirely absent from the dialog. This paper seeks to fill this gap by examining smaller urban areas and rural regions from a complexity economics perspective. Analyzing cross-sectional data provides initial insights into the transformation of regional economic connectedness from rural to urban regions. Using a previously developed metric of economic connectivity based the on co-occurrence of economic activities, called tightness, we examine the skills space and industry space of metropolitan, micropolitan, and rural regions in the United States. We find that the least and the most urbanized regions have the highest tightness, and that this is partially due to the share of specialty skills in a “socio-cognitive” lobe of skills space. However, we also find that the composition of skills in the least and most urbanized regions differs markedly. Findings suggest that planners seeking to increase the share of socio-cognitive skills in the local workforce may be constrained by population size, and that regions of moderate population size may be required to first grow industries that require less cognitive skills.Science Highlights• Regional economic tightness and regionaleconomic output are positively correlated, even when controlling for regionalpopulation.• Skills tightness is greatest in the leastpopulous and most populous regions while industry tightness is greatest in themost populous regions.• Higher skills tightness is driven partially bythe share of socio-cognitive skills in the regional workforce.• The most rural and most urban counties havethe highest share of specialty skills in the socio-cognitive lobe of skillsspace.Policy and PracticeRecommendations• Both skills and industrial tightness should befostered to increase regional per capita output.• Growing jobs that utilize socio-cognitiveskills may increase skills tightness and thus regional productivity.• Moderately-urbanized areas typically have a lowershare of workers with socio-cognitive skills, and may experience more difficultygrowing knowledge-intensive industries.