Effect of Auto Plant Openings on Net Migration in Auto Corridor, 1980-97

Abstract

How do newly opened auto plants influence the patterns of demographic change in an area? An answer to this question has important policy implications. Competition among communities to attract new manufacturing jobs is substantial. Local governments often provide significant economic incentives to firms to induce them to locate a new plant in a given community. Such financial commitments are often justified, in part, by the argument that new jobs will aid the community in retaining its population, particularly its young adult population. The young population is viewed as critical to the future of communities because it represents a significant amount of human capital. In that context, we believe it is important to document the impact that such industrial development has on the local demographic structure. We would expect such demographic change to be most evident in the patterns of migration to and from the respective counties.

Our research links demographic trends of the last two decades to the geographic dispersion of the auto industry. The analysis focuses on the nonmetropolitan areas of seven states that make up the core of the auto industry. This "auto corridor" includes 66 percent of the employees and 70 percent of the plants engaged in the production of cars and light trucks in the U.S. Our primary interest is in estimating the impact that the presence of auto plants has on the pattern of migration in the immediate and proximate counties. We accomplish this by combining county-level migration data with data on the spatial and longitudinal distribution of auto industry plants. Our auto industry dataset is unique, consisting of plant-level information for auto assembly plants plus data on the notoriously hard-to-track auto supplier plants. It encompasses over 2,200 individual plants, representing just under 900,000 employees for the seven auto corridor states. Such comprehensive coverage of this industry represents a significant contribution to the literature. Our models estimate the impact of auto plants on county-level net migration during the 1980s and 1990s. Explanatory variables include measures of economic, locational, and demographic characteristics and several variables measuring the presence and structure of auto plants within and proximate to the county.

Consistent with previous empirical work, we find that a set of background variables widely used in demographic research accounts for the bulk of the variation in county-level migration. However, including variables measuring the presence and addition of auto plants does add to the explanatory power of the model. The addition of a large plant to a county appears to have a significant positive influence on migration. This effect is evident not only in the county where the plant locates, but also in the contiguous counties. The effect of smaller plants is much more limited, but it is in the expected direction.