Economic Progress and Resource Adjustments of Rural Households in the Upper East Tennessee Valley

HAROLD ALPHEUS HENDERSON, Purdue University

Abstract

This case study presents some resource adjustment problems encountered by rural people in adapting to economic change. Specific objectives were to determine for rural people in a low-income area:(1) the conditions under which the problems developed,(2) the amount and quality of resources they had,(3) the amount and source of earnings, and(4) the possible actions such people may take to improve their earnings.Data for the study were from an enumerative survey of 506 rural households in a 7-county area. The economic growth rate of the area has been almost twice that of the nation and per capita value of manufacturing now exceeds that of the nation. In spite of the more rapid economic growth and higher level of output, incomes of people in the area have remained relatively low.Resources of low-income rural households in the study area have many characteristics that limit their earnings in the present use and restrict their transfer to other uses. People have limited formal schooling and other characteristics associated with advanced age. Capital is primarily in fixed farm assets, and land is in such small and irregular mapping units that recombination into profitable-sized units is difficult. Only about 40 percent of the households had resources to make income- improving adjustments.The human and capital resource restrictions are due st least in part to selective processes of people adjusting from farm to nonfarm activities. About half of the maturing youth migrate to other areas to accept nonfarm work when their schooling is terminated. Those who leave have considerably more schooling than the ones who remain in the area. Migrating youth remove much of the liquid capital as well as human resources. Few people over 25 years of age or with less than 12 years of schooling make adjustments from farm to nonfarm activity.There is much variation in incomes among householde in the. About 33 percent of the variation in earnings was explained area. by the amount and quality of measured resources and 26 percent (giving a total of 59) was explained by the use made of resources. Labor returned about twice as much in nonfarm activity as in farming while returns to capital were about the same.Many kinds of adjustments designed to improve incomes may be taken by local people as individuals or groups. Programe to further develop nonfarm employment opportunities appear to be promising alternatives for improving average earnings of local people. Some programs are meaningful for only a limited number. For example, only a few many improve their incomes by farm adjustments involving improved technology and expansion in size. Programs to improve the employability of maturing youth and increase rates of migration may hasten general economic growth and improve the earning capacity of the individuals who migrate from the area to obtain nonfarm work, but tend to further widen the differences in resource base between those in this area and other areas to which the youths migrate. Further study into aspects of these programs not covered by this study is needed.Resources available for potential economic growth are not restricted to those now in the households of the area. can be doubled by borrowing. Capital Labor is being added to the labor force as youths mature at the annual rate of 2 percent of the total population. Many individuals who have left the area would return if local opportunity was available.

Degree

Ph.D.

Subject Area

Agricultural economics

COinS