Like much of the United States, the Memphis region has benefited from a strong economy in the '90s. Its trade, transportation, gaming and health services industries have established the Memphis region as a vibrant business environment. According to a study commissioned by the St. Louis Fed, however, rural counties in the region continue to suffer from a lack of growth in population, jobs and income. David H. Ciscel, economics professor at the University of Memphis, was asked to develop a portrait of the economic changes that have occurred during the past two decades in the Memphis region's rural and urban counties. Ciscel analyzed data for counties in the St. Louis Fed's Memphis zone, which comprises 39 counties in northern Mississippi, 21 counties in western Tennessee and 13 counties in eastern Arkansas. In addition to the Memphis metropolitan area, the region contains three smaller, but important, urban market centers: Jackson, Tenn.; Jonesboro, Ark.; and Tupelo, Miss. Based on his findings, Ciscel concluded that the rural economies of the Memphis region lag behind both the national economy and the area's urban economies on every significant measure of economic well-being:

• Although the total rural population was greater than the total urban population in 1995, population growth was concentrated in the urban areas. Between 1975 and 1995, urban population growth was 20.3 percent, while rural growth was almost stagnant at 0.4 percent.
• 1990 educational attainment levels in the rural counties were lower than those in urban counties and significantly lower than levels in the United States as a whole.
• Job creation improved in all areas of the region; however, rural job creation was less robust. Between 1985 and 1995, the urban counties added 175,988 new jobs (up 31.7 percent), while rural counties added only 101,091 jobs (up 19.8 percent).
• While rural per capita personal income grew during this period, it grew more slowly than urban per capita income and remains at approximately two-thirds of the national level.
• Throughout the region, average yearly wages per job improved at a slightly faster rate than personal income. However, the rural wage level deficit is significant compared with the wage level of the Memphis MSA.

To fill these gaps, Ciscel recommends that local economic development initiatives focus on integrating the economies of the rural and urban areas. He also believes that those interested in promoting growth in the Memphis region must recognize that the economic structure of the rural counties is evolving from an economy based on agriculture and manufacturing to one based on trade and services.

The Fed's Community Affairs Department will use the study's findings to better direct its economic development initiatives in the Memphis region. It also plans to distribute Ciscel's report to a number of Memphis-area financial institutions and community organizations. The report will be available on the St. Louis Fed's web site at http://stlouisfed.org/community_development/assets/pdf/urban_sprawl.pdf.

The views expressed by David Ciscel are not necessarily official opinions of the Federal Reserve System or the Federal Reserve Bank of St. Louis.