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An Empirical Analysis of County-Level Determinants of Small Business Growth and Poverty in Appalachia: A Spatial Simultaneous-Equations Approach

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  • Gebremeskel Gebremariam

    ()
    (Department of Economics, Virginia Tech)

  • Tesfa Gebremedhin

    ()
    (Regional Research Institute, West Virginia University)

  • Peter Schaeffer

    ()
    (Division of Resource Management, West Virginia University)

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    Abstract

    A spatial simultaneous-equations growth equilibrium model estimated by GS2SLS and GS3SLS estimators is used to determine the interdependence between small business growth and poverty. The parameter estimates are mostly consistent with the theoretical expectations. The coefficients for the endogenous variables of the model are positive and significant indicating strong interdependence (feedback simultaneity) between small business and median household income growth rates. The results also show the presence of spatial autoregressive lag simultaneity and spatial cross-regressive lag simultaneity, with respect to both small business and median household income growth rates, and the existence of spatial correlation in the error terms. In addition, the estimates of the structural parameters show that there were strong agglomerative effects and significant conditional convergence with respect to both small business growth and median household income growth in Appalachia during the study period.

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    Bibliographic Info

    Paper provided by Regional Research Institute, West Virginia University in its series Working Papers with number 200603.

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    Length: 43 pages
    Date of creation: 2006
    Date of revision:
    Handle: RePEc:rri:wpaper:200603

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    Keywords: small business growth; poverty; spatial analysis; appalachia;

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    1. repec:fth:stanho:e-95-4 is not listed on IDEAS
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    9. Agusti Segarra Blasco & Maria Remedios Callejon Fornieles, 2001. "Geographical determinants of the creation of manufacturing firms: The regions of Spain," Working Papers in Economics 68, Universitat de Barcelona. Espai de Recerca en Economia.
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