Longitudinal Analysis of Economic Impacts: A Case Study of the Rust Belt

R. Jason Faberman


The "Rust Belt" region of the U.S., located mostly in the Central and Northeastern portions of the country, has for decades been characterized by a strong manufacturing presence. Consequently, the employment dynamics of the region paralleled the stagnant growth associated with this industry. During the 1990's, an economic boom resounded across all sectors of the economy. Within Michigan, Ohio, and Pennsylvania, local labor markets flourished, but the extent to which each grew varied widely.

This paper uses the variation in economic outcomes across metropolitan areas over the 1992-2000 period to study the cross-sectional relations between employment growth, job flows, and establishment characteristics. The study finds that the metropolitan areas with high growth had the high rates of job creation and job destruction, as well as establishments that were larger and younger, on average. Differences in industry composition had a minimal role in these findings.