An Analysis of the Role of Self-Employment in the Economic Development of the Rural Northeastern United States

Generating employment and alleviating poverty are the biggest challenges for regional economic growth in rural areas of the Northeastern United States. Despite the revival of the economy in much of the nation’s heartland, rural areas are still suffering from high poverty and unemployment rates. Self-employment, a measure of entrepreneurship, indicates an opportunity for rural communities to improve quality of life and accelerate regional economic development. Taking into consideration the problem of unemployment in rural communities, there is a need to focus on generating self-employment opportunities at micro level to enhance economic growth and reduce the per capita income ‘gap’ between rural and urban areas. The overall objective of the study is to identify and estimate the impacts of self-employment in the economic development of the Northeastern United States. The empirical model of this study is derived from the three-equation simultaneous model of Deller et al., (2011). The study estimated the relationship of employment, population and per capita income to self-employment. Research findings show that employment and population have a positive relationship to self-employment indicating positive contribution of self-employment to regional economic development.