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June 06, 2016

A rural-urban political divide: Is it caused by labor-market outcomes?

Is there a changing relationship between geographic differences in political attitudes and geographic differences in economic performance? Four-fifths of the US population lives in urban areas. Yet in 18 of the 50 states that fraction is less than two-thirds; and of those 18 most rural states, the losing candidate in the 2012 presidential election won all but four. A recent poll on preferences in the upcoming presidential election showed urban voters favoring Clinton over Trump by 55% to 43%, while rural voters favored Trump by a much wider margin. In 1992 the Democratic candidate (President Clinton) won more counties with a Whole Foods outlet (expected to be liberal) than those with a Cracker Barrel store (expected to be conservative); but in 2012, President Obama won even more of the “Whole Foods” counties, but many fewer of the “Cracker Barrel” counties. There is a long-standing and apparently growing rural–urban political difference; and I imagine it is reflected in similar differences in many other countries. But why is it growing—and how much of its growth might arise from rural–urban differences in how well workers in the two areas are doing?

To examine the economic origins of the increasing right-ward turn in rural areas, consider what has happened to earnings. Nominal earnings have generally been lower in the last 75 years in rural than in urban areas. Whether real earnings are lower is a difficult question to answer, as it is hard to compare costs of living across areas. Suffice it to note that in 1995 average weekly earnings of full-time (35+ hours) workers in rural areas were 78% of those in urban areas. The median rural earner was at 82%; and even workers toward the bottom in rural areas (at the 25th percentile) earned 85% of what their urban counterparts made. Remarkably, by 2015 these ratios had all risen: The mean rural worker was at 81%, the median at 85% and the 25th percentile was at 89% of urban weekly earnings. And the same upward trend in relative earnings exists if we include all workers. Rural wages are growing relative to wages in urban areas.

Another explanation now that the Great Recession is long past could be that rural areas are suffering higher unemployment than urban areas. Yet in 1995 the average unemployment rates were 5.5% in rural areas, 5.4% in urban areas. Today, they are respectively 5.4% and 5.1%—essentially no long-term change in either area. Differential changes in unemployment don’t explain this political trend either.

The widening rural–urban gap in political attitudes does not appear to be caused by changing outcomes in rural and urban labor markets. In fact, if anything these have moved in an opposite direction from apparent changes in political attitudes. So what’s causing it? I leave the speculation to others; but it’s not easy to demonstrate any specific economic cause of this political change. And I wonder if it’s unique to the US or whether it’s a phenomenon in most wealthy countries.

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