Employment Growth, Worker Mobility, and Rural Economic Development

A county‐level labor market model is estimated for North Carolina. The model accounts for inter‐county commuting, migration, and within‐county adjustments to labor demand shocks. Econometric results indicate that most employment growth (70–80%) during the 1980s was accommodated by changes in commuting flows. Evidence is also presented indicating that labor force growth—and, by extension, population growth and associated fiscal impacts—in rural counties is sensitive to employment growth in nearby urban counties. These results highlight two opposing forces related to spatial spillovers that are usually neglected in analyses of the economic and fiscal impacts of employment growth.