How Specialized is “Too” Specialized? Outmigration and Industry Diversification in Nonmetropolitan Counties across America

Outmigration and industrial composition have separately been the focal points of a significant amount of research related to nonmetropolitan counties; however, few (if any) studies have explicitly looked at the relationship between the two topics. The primary objective of this research is to identify what industry specialization level is “too” specialized with regards to net migration – that is, to determine the level where specialization begins to have a damaging (or positive) effect on population change. County-level data from a variety of sources is used to explore the impact of both earnings-based and employment-based definitions of specialization on net migration in nonmetropolitan counties from 2000–2009. Two distinct techniques (ordinary least squares and average treatment effects) are then used to assess both the impact and causality of being highly specialized. The results confirm that some types of specialization are related to outmigration, while others encourage in-migration. Implications for economic developers in nonmetropolitan areas include being wary of cluster-based strategies and tracking their own local levels of employment-based specialization.