Self-employment as Economic Development Strategy:
What Does It Mean for Metro and Nonmetro Counties in the Southeastern United States?
Self-employment in the Southeast has grown significantly over the past decade as a share of total full- and part-time employment, rising from 14 percent in 2000 to 20 percent in 2008. This 14 percent rise represents an increase of 56 percent, or from 5.2 million people to 8.2 million. A recent study by Anil Rupasingha, community and economic development research economist at the Federal Reserve Bank of Atlanta, finds that self-employment has several very favorable outcomes overall, but there are important differences between self-employment in urban and rural areas, with implications for policymakers and community and economic developers.
Rupasingha reports that in the Southeast, higher rates of self-employment in metro counties reduce poverty. While in nonmetro counties self-employment does improve overall employment and income growth, it does not have the same poverty-reducing effects as in metro counties. This finding suggests that self-employment in nonmetro counties is not lucrative enough to raise individuals out of poverty in the Southeast, but there may not be a sufficient number of wage employment opportunities to offer alternatives.
Read the full paper online.