Business Services, Productivity, and Wages: Metropolitan and Nonmetropolitan Michigan Counties, 1977–1997

This article investigates the growth of business services (SIC73) in Michigan and models the relationship between the industry and local economic conditions in metropolitan and nonmetropolitan counties. The research makes four conclusions. First, SIC73 measures explain variance in manufacturing productivity. Second, SIC73 indicators explain variation in manufacturing and overall wages. Third, these relationships vary between metropolitan and nonmetropolitan counties. Despite growth in rural regions, SIC73 indicators more effectively predict wages and productivity in metropolitan counties. Hence, the localized benefits associated with SIC73 industries are more strongly associated with metropolitan economies. Fourth, the interdependencies that have developed between SIC73 industries and the manufacturing sector decrease over time in both metropolitan and nonmetropolitan contexts. The article concludes with suggestions for future research.