Regional Development and Labor Turnover: More on the Frostbelt/Sunbelt Controversy

Much has been written about plant closings in the frostbelt states and the economic expansion of the sunbelt. Attempts to explain different development patterns are contradictory because assumptions made about the mobility of labor and capital permit competing theories to develop. Empirical studies that support the various views have emphasized the determinants of interregional migration and capital flows, but the implications of the alternative development theories for labor market turnover behavior (quits and layoffs) have not been tested. T
he purpose of this paper is to rectify this deficiency in the regional economic development literature. A cross-section model of interindustry labor turnover behavior is developed and tested using data on the manufacturing sector in 1976. A surprising result of the study is the lack of evidence that workers are quitting their jobs in the frostbelt to move to the sunbelt. Moreover, the study found no evidence that layoff rates are significantly higher in the frostbelt, as would be expected if businesses in that region are closing their plants and moving to the sunbelt.
The study proceeds with a brief introduction in Section I. Section II discusses the competing theories of regional economic development and the implication of each theory for labor market turnover behavior. Section III presents the models of interindustry quit and layoff behavior that are used to test the labor market implications of the competing theories. The test results are presented in Section IV. Finally, a summary and conclusions are presented in Section V.