Home About Latest Browse RSS Advanced Search

Federal Reserve Bank of Cleveland
Working Papers (Old Series)
Manufacturing Employment Losses and the Economic Performance of the Industrial Heartland
Mark E. Schweitzer
Abstract

The industrial Midwest, sometimes referred to disparagingly as the “Rust Belt,” has long been recognized as a distinct economic region and an important contributor to the US economy. Prior research has emphasized the role that losses in the manufacturing sector have played in the plight of several Midwestern states and cities, particularly in the late 1970s and early 1980s. We identify a hypothetical industrial heartland region consisting of MSAs that have high concentrations of 1969 earnings in manufacturing relative to the US average and that are located within the geography often associated with the Rust Belt. For comparison purposes we also identify a set of manufacturing-intensive MSAs outside the region and a set of MSAs with low manufacturing concentrations (service-intensive MSAs). We then identify cross-sectional correlations in the economic performance of MSAs during and following losses in manufacturing employment and evaluate whether the industrial heartland region has a distinct response to those losses. We identify two major shocks to manufacturing employment: 1979 to 1983 and 2001 to 2010. While the second episode was slower to develop, the employment losses in manufacturing that were sustained during it are nearly as large as in the first episode. The size of manufacturing loss is reliably correlated across MSAs during and following these two manufacturing shocks with measures of economic performance including nonmanufacturing employment, unemployment, population, and per capita income levels. In addition, we find that manufacturing employment losses typically are associated with larger declines in economic performance in the MSAs of the industrial heartland than in other manufacturing-intensive MSAs or in service-intensive MSAs. Despite substantially lower shares of employment and earnings of manufacturing within the industrial heartland in 2001, the effect of the second manufacturing employment shock is substantial (particularly for real per capita income) and similar in magnitude to the first manufacturing shock.


Download Full text
Cite this item
Mark E. Schweitzer, Manufacturing Employment Losses and the Economic Performance of the Industrial Heartland, Federal Reserve Bank of Cleveland, Working Papers (Old Series) 1712, 22 Jun 2017.
More from this series
JEL Classification:
Subject headings:
Keywords: manufacturing; Midwest; rust belt
DOI: 10.26509/frbc-wp-201712
For corrections, contact 4D Library ()
Fed-in-Print is the central catalog of publications within the Federal Reserve System. It is managed and hosted by the Economic Research Division, Federal Reserve Bank of St. Louis.

Privacy Legal