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Rural Economy

Rural areas are defined in a number of ways according to the economic or social outcome of interest. Rural economic and demographic changes are closely linked; both are essential to understanding whether diverse rural areas are prospering or in distress, and how underlying factors such as education affect the well-being of rural communities. Recent trends point to relatively slow employment and population growth in rural areas, accompanied by increases in poverty. These trends vary widely across rural America, however.

One definition of rural, based on relatively small geographic building blocks, is provided by the U.S. Census Bureau in its urban-rural classification system. In this delineation, rural areas comprise open country and settlements with fewer than 2,500 residents. Urban areas comprise larger places and the densely settled areas around them, but do not necessarily follow municipal boundaries. Urban areas are essentially densely settled territory as it might appear from the air.
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The Economic Research Service, and others who analyze conditions in "rural" America, most often study conditions in nonmetropolitan (nonmetro) areas, which are defined on the basis of counties. Nonmetro counties include some combination of open countryside, rural towns (places with fewer than 2,500 people), and urban areas (with populations ranging from 2,500 to 49,999) that are not part of larger labor market areas (metropolitan areas). The 1,976 counties currently classified as nonmetro include 15 percent of the U.S. population (just over 46 million people) and 72 percent of the Nation’s land area.
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Between July 2010 and July 2013, nonmetro population declined for the first time since annual county population estimates were first recorded in the 1960s. Historically, nonmetro population grew because natural increase (more births than deaths) always offset net migration loss (more people moving out than moving in). But falling birth rates and an aging population have steadily reduced natural increase in nonmetro areas over time. The recent recession has also dampened migration to nonmetro locations more than it has dampened migration out, leading to the overall drop in nonmetro population levels.
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During 2010-13, the number of nonmetro counties losing population reached a historic high of 1,269. Population growth slowed considerably in the Mountain West and in eastern States for the first time in decades. While urban population size, metro proximity, attractive scenery, and recreation potential have historically contributed to nonmetro population growth, their influence has weakened (at least for the time being). But not all nonmetro areas experienced decline. Spurred by an energy boom, large sections of the northern Great Plains turned around decades of population loss, and at least some amenity-rich areas continue to grow, albeit at a more modest rate.
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While the overall nonmetro population grew 4.5 percent in the 2000s, the nonmetro Hispanic population increased 45 percent. Additionally, Hispanic population growth was not confined to areas with large Hispanic concentrations in the Southwest—Hispanic populations more than doubled in most nonmetro counties in the South, and in many otherwise slow-growing or declining sections of the Nation’s Heartland. In 228 nonmetro counties, overall population loss was avoided because Hispanic population growth more than offset non-Hispanic population decline.
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Nonmetro areas have had a higher rate of poverty than metro areas since the 1960s (when poverty rates were first officially recorded). Over time, however, the difference between nonmetro and metro poverty rates has generally narrowed, falling from an average difference of 4.5 percentage points in the 1980s to a record low of 1.6 percentage points in 2010. In 2012, the nonmetro poverty rate ticked up to 17.7 percent, while the metro rate dropped slightly to 14.5 percent. The current nonmetro poverty rate is at its highest since 1986.
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Historically, nonmetro areas in the United States have lagged behind metro areas in educational attainment, but they are catching up. High school completion, college attendance, and college completion in nonmetro areas rose over the 2000s. However, nonmetro areas still face a large gap compared with metro areas in the share of adults with a bachelor’s degree or higher – 17.4 percent versus 30.2 percent. At least part of this gap reflects the higher pay highly educated workers can often earn in metropolitan labor markets.
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Last updated: Tuesday, September 09, 2014

For more information contact: Kathleen Kassel

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