The great recession and the public sector in rural America

Abstract

Why did rural areas recover from the great recession much more slowly than metropolitan areas? Due to declining tax revenues and intergovernmental aid, employment in the American local government sector fell substantially after the great recession. Cuts to local public employment were especially large, long-lasting and consequential in rural areas, which have become relatively dependent on public-sector employment and intergovernmental transfers. The public sector is relatively inconsequential in urban America, but in many rural places, a decade after the great recession, the public sector was the slowest category of employment to recover and the leading source of long-term job losses.