Structural Drivers of Prosperity
Insights

Far from A Tale of Two Cities, American prosperity is better described as a tale of the big city and the small town. Across the nation, urban counties are generally more prosperous than their rural counterparts, equivalent to the difference between Maine (18th) and Wyoming (25th) in the State Index. The key difference between urban and rural counties is in the composition of that prosperity. This is exhibited in terms of both better economic performance and social wellbeing in urban counties. However, rural counties do compensate somewhat by having lower crime rates and stronger social networks on average.

Structural drivers of prosperity 1

The overall structure and higher population density of a city confer many economic advantages. Most affected by urbanization is physical infrastructure. The quality of transport, as well as the coverage and efficiency of communications infrastructure, is far better in urban counties. The urban environment also provides the basis for better healthcare — people generally live in closer proximity to medical facilities such as hospitals and clinics. The proportion of people who report having been to the dentist and the doctor for routine check-ups in the last year is higher in cities. A greater proportion of people in rural counties have high rates of behavioral risk factors such as obesity and smoking. There are, of course, health drawbacks associated with the high-density environment of a city, as we have seen with devastating effect recently: as of early May, the greater New York City area alone accounted for nearly a quarter of all COVID-19 deaths in the United States.

Rural counties, however, are in no way immune to pandemics, and though the crowded nature of city life clearly accelerates infection, the fact that “cities bring together people from different walks of life” also means that they “foster the transmission of ideas.”

In cities, tertiary education and the skills of the adult population are substantially better than in rural areas; by far the most differentiating factor is the proportion of adults who hold at least a bachelor’s degree. In urban counties, 36% of people on average have at least this level of qualification, whereas in rural counties the figure is only 18%. This is often because high-skilled economic migrants — whether they are from other countries, other states, or even from within the same state — tend to move to cities where there are better universities and a greater range of employment opportunities. At other stages of the education system (pre-K through high school), there can be some benefits to living in cities, such as a shorter distance to travel to school, though the difference in the quality of education at this level is minor in comparison.

The high-density nature of life in cities is a facilitator of many things, but it changes the way that bonds of trust are formed between groups and can lead to more transactional, rather than personal, relationships. Institutional trust is higher in urban counties, with residents relying more heavily on the police. Other institutions, such as the media and government, are more salient in an urban environment. Consequently, these institutions earn a greater degree of trust from the people they serve. Further to this, social tolerance is typically higher in cities, evidenced by a lower incidence of hate groups and use of ethnic slurs. That said, the way people interact with those in more intermediate circles, such as their neighborhoods and community organizations, differs depending on the level of urbanization. Levels of civic and social participation and the amount of time that people spend engaging in community activities are both lower in cities. Nonetheless, close personal relationships, such as those that people form with their most proximate social circles — family and friends — appear to be independent of the population density and are as strong in cities as they are in rural counties.

OTHER URBANIZATION PATTERNS

While urbanization clearly plays a part in the story of prosperity in the United States, it is far from the only factor — and other drivers correlated with urbanization may confound this factor. Not only do cities have a distinct physical structure, but their residents and the lives they lead also differ from those in rural America. For example, cities tend to have a greater share of working-age residents, more ‘knowledge’ workers, and a higher degree of ethnic diversity.

While two-thirds of urban counties have a disproportionately large working-age population share, half of rural counties have a disproportionately small share. These rural counties that have lower working-age population shares generally have a very high number of those aged over 65 — i.e. those that have retired and already left the workforce — rather than a high proportion of children.

The proportion of knowledge workers — those working in such sectors as finance and insurance or professional, scientific, and technical services — varies dramatically with rurality. However, knowledge workers make up only 10% of employment in rural counties on average, while 28% of employment in urban counties falls in this category. In contrast, government workers are proportionally evenly spread across rural to suburban counties, though they make up a lower share of the urban workforce. Similarly, there is no substantive pattern in the distribution of retail workers; much as every community needs representation in government, everyone needs access to shops.

The greater proportion of seniors in rural populations explains some differences in levels of civic and social participation between urban and rural counties. The average urban county falls in the 41st percentile for this measure, whereas the average rural county is in the 63rd. The idea that older adults living in rural places have “stronger ties to their communities and [retain] high-quality relationships with friends” has been present in the American narrative for decades and is evidenced by many studies.

While the organization of cities confers many structural advantages, the lower-density nature of life in rural areas also has its merits. Most prominently, violent crime is lower outside cities, as is property crime. For example, rates of robbery are on average 89% lower in rural counties than in urban counties, and rates of larceny are similarly 42% lower. Additionally, air quality in rural areas is higher.

Disparities in many aspects of prosperity also correlate with the ethnic composition of each county. For example, at any level of urbanization, the rate of poverty is higher in more ethnically diverse counties, with the greatest difference in rural areas. Residents of counties with larger minority populations are also more likely to lack healthcare coverage. Over 17% of people in the most ethnically diverse counties avoided medical care due to the cost, compared to 14% in the least ethnically diverse counties. The proportion of people who hold at least a bachelor’s degree — which represents historical access to higher education — is lower in more ethnically diverse counties. That said, the current college enrollment rate shows no relationship with racial diversity.

We have seen that different types of people live in urban and rural counties, though even accounting for demographics, much of the variation in prosperity remains unexplained. Therefore, it is helpful to not only look at who is living in urban and rural environments, but also the functions they carry out — their employment type.

At any point on the urban-rural spectrum, we find that a higher proportion of ‘knowledge’ workers in a county corresponds with a greater degree of prosperity. This relationship is strongest in urban areas, where it is correlated with better education and health as well as economic dynamism. The incidence of smoking, drug use, and obesity is lower in urban counties with a larger share of knowledge workers. Additionally, the skill level of the adult population is higher in counties with a large share of knowledge workers, as these jobs typically require at least a bachelor’s degree. In urban counties with large knowledge worker shares, almost 40% of adults have a bachelor’s degree, but in urban counties with low shares, only 18% do. The level of social tolerance is also higher in counties with large knowledge worker shares, part of which can be explained by the generally higher education levels.

There is a slight negative correlation between the proportion of government workers and prosperity. The magnitude of this interaction is small, but it permeates through many aspects of prosperity, including living conditions, the business environment, and crime rates.

Prosperity does not seem to be correlated with the share of retail workers. However, rural areas that are retail hubs have prosperity profiles that are more akin to urban counties. For example, a larger share of retail workers in a rural county is correlated with higher quality transport and telecommunications infrastructure, but also with higher rates of violent crime.

CONCLUSION

The confluence of so many structural drivers results not only in many different levels of prosperity but also in so many different types of prosperity. This means that no single factor is a prosperity panacea; this fact is evident in the structural diversity of the highest-ranked counties of the eight profiled states. For example, urban Nassau County (NY), with a population density of over 4,500 people per square mile, is roughly as prosperous as rural Mineral County (CO), which has fewer than one person per square mile. Likewise, San Mateo County (CA), with almost 40% of its workers in knowledge jobs, is as prosperous as Winneshiek County (IA), which has fewer than 5% of its workforce in equivalent jobs.

The greatly varied composition of demographics, employment type, and urbanization of the counties we have analyzed shows there is no single path to prosperity. That the counties of those states we have profiled resemble a patchwork quilt is partly a result of, and gives the opportunity for, individual choice. People are likely to live where their ‘ideal’ blend of prosperity is greatest; some people highly value clean air and space, others place the most value in low crime rates, and still others value an environment that is good for business. Despite this variation, we do see broad patterns emerging, particularly in relation to levels of urbanization.

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