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Local Economic Instability and Business Location: The Case of Maine

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  • Todd M. Gabe

Abstract

This paper investigates the effects of local economic instability on business location in Maine. Instability is represented by the quarterly, six-month, and annual persistence of employment in Maine municipalities, and seasonal spikes in local employment. Regression results suggest that businesses are attracted to areas with high short-term and seasonal stability, but that annual fluctuations in local employment are not a significant deterrent to new business activity. Services businesses are particularly sensitive to local employment fluctuations, presumably because they are often highly integrated into the economy. Findings suggest that policymakers can jointly pursue the objectives of local economic growth and stability.

Suggested Citation

  • Todd M. Gabe, 2007. "Local Economic Instability and Business Location: The Case of Maine," Land Economics, University of Wisconsin Press, vol. 83(3), pages 398-411.
  • Handle: RePEc:uwp:landec:v:83:y:2007:i:3:p:398-411
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    References listed on IDEAS

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    1. Smith, Stephen M. & Gibson, Cosette M., 1988. "Industrial Diversification In Nonmetropolitan Counties And Its Effect On Economic Stability," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 13(02), December.
    2. Head, Keith & Ries, John & Swenson, Deborah, 1995. "Agglomeration benefits and location choice: Evidence from Japanese manufacturing investments in the United States," Journal of International Economics, Elsevier, vol. 38(3-4), pages 223-247, May.
    3. Carlton, Dennis W, 1983. "The Location and Employment Choices of New Firms: An Econometric Model with Discrete and Continuous Endogenous Variables," The Review of Economics and Statistics, MIT Press, vol. 65(3), pages 440-449, August.
    4. Christopher Fawson & Dawn Thilmany & John E. Keith, 1998. "Employment Stability and the Role of Sectoral Dominance in Rural Economies," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(3), pages 521-533.
    5. John R. Kort, 1981. "Regional Economic Instability and Industrial Diversification in the U.S," Land Economics, University of Wisconsin Press, vol. 57(4), pages 596-608.
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    Cited by:

    1. Masakure, Oliver & Cranfield, John & Henson, Spencer, 2008. "The Financial Performance of Non-farm Microenterprises in Ghana," World Development, Elsevier, vol. 36(12), pages 2733-2762, December.

    More about this item

    JEL classification:

    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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