The Rural-Urban Gap in Manufacturing Productivity and Wages: Effects of Industry Mix and Region

This study analyzes urban and rural worker productivity and wages using unpublished 1992 Census of Manufactures data. A decomposition of regional averages separates out effects of regional industry mix from within-industry differentials over a rural-urban continuum and for metro and nonmetro portions of census regions. Industry mix accounts for about half of the rural-urban gap in both productivity and wages. After controlling for industry mix, both productivity and wages increase with urbanization. The size of the nonmetro gap in productivity and wages varies across regions. Comparison of actual 1991-93 employment growth with regional wage and productivity differentials shows that job growth occurred in regions with low wages