Distribution of Personal Income in Agriculture-Dependent Counties of Midwestern States: A Policy Variables Approach

Significant social, demographic, and economic changes have occurred in the North Central states since 1960. This document examines structural and policy variables related to distribution of income, during the years 1960-80 in the 397 counties defined as agriculture-dependent in 13 North Central states. Personal income distribution has been explained by four types of theories: stochastic, personal characteristic, regional endowment, and development. These theories were integrated into a single working model for empirical analysis. A regression model was developed that included five structural variables and five policy variables. Correlation coefficients were calculated to determine the degree to which variables were related to income distribution (Gini-ratio) in 1960, 1970, and 1980. The relative influence of county structural endowments and social and economic policies on income inequalities differed in each census year, shifting from policy variables as most influential in 1960 to structural variables as slightly more influential in 1980. Income distribution was related to retirement benefits and education levels (see pages 37-42) in all three census years; and to unemployment benefits, county government expenditures, proportion of commercial farms, and manufacturing employment in two out of three years. This report contains 70 references and 21 data tables and graphs. (SV)