Hispanic Growth, Higher Rural Incomes

The Hispanic population is growing in rural America. And, yes, it's a good thing economically, according to a new study.

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Editor’s Note:Below is an excerpt from a recent paper that addresses the question of whether increasing Hispanic population in rural counties leads to increasing income. As you can see from the map above, rural counties across the country have seen a growth in their Hispanic populations. Dennis Coates and T. H. Gindling found that this demographic change has benefited rural America. The full paper is titled “Is Hispanic Population Dispersion Into Rural Counties Contributing To Local Economic Growth?” and it appeared in Contemporary Economic Policy. 

Historically, young Americans have been moving out of rural areas and small towns, leaving behind smaller and older populations. 

Consistent with this trend, in the 1970s and 1980s population shrank in non-metropolitan areas across the Great Plains in the Midwest, Appalachia in the East, and parts of the Old South. In the 1990s, the trend of declining population slowed and in some cases reversed in some non-metropolitan areas, largely as the result of growth in the Hispanic population into these rural areas. 

“The widespread geographic diffusion of Hispanics from immigrant gateways to newly emerging destinations is perhaps the most significant trend in U.S. population redistribution over the past quarter century,” wrote D.T. Lichter and  K. M. Johnson in 2009. As a 2008 front page article in USA Today hypothesized: “For declining counties, many in the Great Plains, the growth in young Hispanics may be the only way out of a population spiral.” 

Hispanic population growth in rural areas is not only the result of immigration; Johnson and Lichter (2008) show that the growth in Hispanic populations in non-metropolitan areas is being driven as much by births to immigrant families as by immigrants themselves. 

Indeed, they conclude, “Hispanic population growth is self-sustaining, even if immigration were to be seriously curtailed through new restrictive legislation.” Growth in Hispanic populations is, therefore, not only leading to population growth in some rural areas where population had been declining but also to changes in the age structure of the population in those areas—making it younger. 

These facts suggest that studies of the impact of population changes on local economies in non-metropolitan areas should not focus on the impact of immigrants alone, but should also include the impact of their growing families.

New Faces in New Places: The Changing Geography of American Immigration (by Zuniga and Hernandez-Leon, 2005) documents these and other changes and points out that many of these new destinations may lack the fiscal and social resources to adequately assist the newcomers as they are integrated into the community. On the other hand, K. Liaw and William Frey in 2007 suggested that:

Small communities experiencing declining population and tax base as a consequence of the substantial out-migration of their working-age natives were revitalized or prevented from losing their local plants by the arrival of hardworking immigrants who were willing to accept practically any kind of job, including the cold, wet, repetitive, and injury-prone jobs in meat-processing plants where the low wages were nonetheless higher than farm wages and several times the wages in the immigrants’ home countries.

In other words, it is not clear whether the overwhelmingly Hispanic population growth in non-metropolitan and previously shrinking areas is, on balance, good or bad for rural America.

Definitions of what is good or bad for rural America are obviously value-laden and contentious. In this paper, we focus on the simple issue of whether faster growth in the population caused by the influx of Hispanics is linked to faster growth in income per capita in rural counties. 

While there is a large literature on the impact of immigration on wages, taxes, government spending, and housing prices in metropolitan areas in the United States, we know of no published research that examines the impact of immigration and population growth on the health of local economies in non-metropolitan and previously depressed areas. Given the well-documented influx of new residents, predominantly Hispanics, both from within and without the United States, into rural areas, this is a significant gap in the literature on rural economies. 

It is important to acknowledge that our analysis is not strictly of the impact of immigration as we analyze all population change, from immigration and from natural population growth. Moreover, motivated by the USA Today article and the academic research cited above, we divide population change between that arising from Hispanics and non-Hispanics. 

This graph shows that many counties in the Great Plains lost white population; but many gained Hispanic population. A new paper finds that counties that gained Hispanic citizens generally had rising incomes.

Evidence reveals that where population decline has slowed or even reversed, it is because of the rapid growth in the Hispanic population. The analysis is unique due to our focus on one ethnic (immigrant) group; the growth of this group is the principal component in the population growth in a large number of non-metropolitan and previously depressed areas.

Our results indicate strong support for the hypothesis that Hispanic population growth has fueled increased growth in per capita income in those small, rural communities whose populations had been in decline during the 1970s and 1980s. 

More specifically, we find that Hispanic population growth is positively linked to growth in per capita income in non-metropolitan counties but not in counties in small or large metropolitan areas. 

Further, we find that Hispanic population growth is positively linked to faster income per capita growth in communities that had lost population in either the 1970s, the 1980s, or during both decades, but is generally associated with slower growth in communities whose population was growing during the 1970s and 1980s. 

Specifically, we find the growth in the Hispanic population had a consistent positive effect on growth in income per capita only in non-metropolitan areas whose populations had been declining in the 1970s or 1980s. We find that a 10 percentage point increase in the Hispanic population leads to a 0.44 percentage point increase in the rate of growth of per capita income in non-metropolitan counties, where population had been declining in the 1970s or 1980s. 

Comparing the 1980 – 1990 period to the 1990 – 2000 period, the mean Hispanic population growth rate in rural counties that had been losing population was increased by 144.5 percentage points (from 24.1% to 168.6%), while the economies of these counties grew by an average of 19.9% between 1980 to 1990 and by 26.3% from 1990 to 2000. 

The values suggest that Hispanic population growth in these counties in the 1990s resulted in, on average, an increase in the growth rate in per capita income of 6.36 percentage points (from 19.9% between 1980 and 1990 to 25.7% between 1990 and 2000). Note that our evidence is consistent with a conclusion that any population growth in non-metropolitan counties that had been losing population would cause positive economic growth. 

We focus on Hispanic population growth because in these rural counties the population is growing only because of Hispanic population growth (non-Hispanics are moving out).

 

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