Metropolitan Spillover Effects and Economic Growth of Non-Metropolitan Areas: Evidence from Indiana Counties

Litao Zhong


This paper examines the importance of metropolitan spillover effects on the economic growth of non-metropolitan counties in the state of Indiana by using panel data from 2003 to 2013. I hypothesize that metro economic size and non-metro counties’ locations, along with other metro social and economic factors, will have significant impact on non-metro counties’ economic growth. Based on the results from the Random-effects Generalized Least Squares (GLS) and the population-averaged Generalized Estimating Equations (GEE) regressions, metro GDP and population have significant, positive impacts on non-metro counties’ economic growth, while non-metro counties’ locations (i.e., the distance to a metro county), metro K-12 school enrollment, the wage gap and the number of commuters between metro and non-metro areas have significant, negative effects on the economic growth of non-metro counties in Indiana. Some of the dummy variables also showed significant association with the non-metro counties’ economic well-being.

Full Text:



Abel, J. R., & Gabe, T. M. (2011). Human capital and economic activity in urban America. Regional Studies, 45(8), 1079-1090.

Aghion, P., Caroli, E., & Garcia-Penalosa, C. (1999). Inequality and economic growth: the perspective of the new growth theories. Journal of Economic literature, 37(4), 1615-1660.

Alesina, A., & Perotti, R. (1996). Income distribution, political instability, and investment. European economic review, 40(6), 1203-1228.

Barro, Robert, 1999, Inequality, Growth and Investment, NBER Working Paper 7038

Beggs, J. J., Haines, V. A., & Hurlbert, J. S. (1996). Revisiting the Rural‐Urban Contrast: Personal Networks in Nonmetropolitan and Metropolitan Settings1. Rural sociology, 61(2), 306-325.

Besser, T. L., & Miller, N. J. (2013). Community matters: successful entrepreneurship in remote rural US locations. The International Journal of Entrepreneurship and Innovation, 14(1), 15-27.

Chandra, A., & Thompson, E. (2000). Does public infrastructure affect economic activity?: Evidence from the rural interstate highway system. Regional Science and Urban Economics, 30(4), 457-490.

Cheshire, P., & Carbonaro, G. (1996). Urban economic growth in Europe: Testing theory and policy prescriptions. Urban Studies, 33(7), 1111-1128.

Cortes, B. S., McKinnis, M., & Davidsson, M. (2013). Industrial Composition, Local Fiscal Policy and Micropolitan Area Economic Growth. Mid-Continent Regional Science Association, 30.

Deller, S. C., Tsai, T. H. S., Marcouiller, D. W., & English, D. B. (2001). The role of amenities and quality of life in rural economic growth. American Journal of Agricultural Economics, 83(2), 352-365.

Ding, L. (2002). Rural–urban income disparity: impact of growth, allocative efficiency, and local growth welfare. China Economic Review, 13(4), 419-429.

Eppler, U., Fritsche, U. R., & Laaks, S. Urban-Rural Linkages and Global Sustainable Land Use. Unpublished paper.

Fallah, B. N., & Partridge, M. (2007). The elusive inequality-economic growth relationship: are there differences between cities and the countryside? The Annals of Regional Science, 41(2), 375-400.

Fan, S., Hazell, P., & Thorat, S. (2000). Government spending, growth and poverty in rural India. American Journal of Agricultural Economics, 82(4), 1038-1051.

Fleisher, B., Li, H., & Zhao, M. Q. (2010). Human capital, economic growth, and regional inequality in China. Journal of development economics, 92(2), 215-231.

Florida, R., Mellander, C., & Stolarick, K. (2008). Inside the black box of regional development—human capital, the creative class and tolerance. Journal of economic geography, 8(5), 615-649.

Forbes, K. (1997). “A Reassessment of the Relationship Between Inequality and Growth,” Unpublished paper, MIT

Frenken, K., Van Oort, F., & Verburg, T. (2007). Related variety, unrelated variety and regional economic growth. Regional studies, 41(5), 685-697.

Glaeser, E. L., Kallal, H. D., Scheinkman, J. A., & Shleifer, A. (1991). Growth in cities (No. w3787). National Bureau of Economic Research.

Goetz, S. J., Han, Y., Findeis, J. L., & Brasier, K. J. (2010). US commuting networks and economic growth: measurement and implications for spatial policy. Growth and Change, 41(2), 276-302.

Krugman, P. (1990). Increasing returns and economic geography (No. w3275). National Bureau of Economic Research.

Li, H., & Zou, H. F. (1998). Income inequality is not harmful for growth: theory and evidence. Review of development economics, 2(3), 318-334.

Liu, Y., Wang, X., & Wu, J. Do bigger cities contribute to economic growth in surrounding areas? Evidence from county-level data in China. Unpublished paper.

Lucas, R. E. (1988). On the mechanics of economic development. Journal of monetary economics, 22(1), 3-42.

Lucas, R. E. (2000). Making a Miracle', Econometrica, 61 (2), March, 251-72.

Mao, W., & Koo, W. W. (1997). Productivity growth, technological progress, and efficiency change in Chinese agriculture after rural economic reforms: a DEA approach. China Economic Review, 8(2), 157-174.

Mankiw, N. G., Romer, D., & Weil, D. N. (1990). A contribution to the empirics of economic growth (No. w3541). National Bureau of Economic Research.

McGranahan, D., & Wojan, T. (2007). Recasting the creative class to examine growth processes in rural and urban counties. Regional studies, 41(2), 197-216.

Morrill, R., Cromartie, J., & Hart, G. (1999). Metropolitan, urban, and rural commuting areas: toward a better depiction of the United States settlement system. Urban Geography, 20(8), 727-748.

Mulligan, G. F. (2013). The future of non‐metropolitan areas. Regional Science Policy & Practice, 5(2), 219-224.

North, D. C. (1955). Location theory and regional economic growth. The Journal of Political Economy, 243-258.

Partridge, M. D., Ali, K., & Olfert, M. (2010). Rural‐to‐Urban Commuting: Three Degrees of Integration. Growth and Change, 41(2), 303-335.

Partridge, M. D., & Rickman, D. S. (2008). Distance from urban agglomeration economies and rural poverty. Journal of Regional Science, 48(2), 285-310.

Perotti, R. (1996). Growth, income distribution, and democracy: what the data say. Journal of Economic growth, 1(2), 149-187.

Persson, T., & Tabellini, G. (1994). Is inequality harmful for growth?. The American Economic Review, 600-621.

Polèse, M. (2010). The wealth and poverty of regions: Why cities matter. University of Chicago Press.

Poon, J. P., Thai, D. T., & Naybor, D. (2012). Social capital and female entrepreneurship in rural regions: Evidence from Vietnam. Applied Geography, 35(1), 308-315.

Ring, J. K., Peredo, A. M., & Chrisman, J. J. (2010). Business networks and economic development in rural communities in the United States. Entrepreneurship Theory and Practice, 34(1), 171-195.

Romer, P. M. (1986). Increasing returns and long-run growth. The journal of political economy, 1002-1037.

Simon, J. L. (1986). Theory of population and economic growth.

Zenou, Y. (2011). Rural–urban Migration and Unemployment: Theory and Policy Implications. Journal of Regional Science, 51(1), 65-82.



  • There are currently no refbacks.

Interantional Journal of Regional Development  ISSN 2373-9851

Copyright © Macrothink Institute 

To make sure that you can receive messages from us, please add the '' domains to your e-mail 'safe list'. If you do not receive e-mail in your 'inbox', please check your 'spam' or 'junk' folder.