An Analysis of Rural-Urban Differences in Average Family Income: An Application of the Oaxaca and Cotton-Neumark Decomposition Techniques

Using multivariate regression analysis, this study examines the effect that demographic, educational, economic, and geographic characteristics have on average family income in rural and urban counties in the United States. The results indicate that while the above-mentioned characteristics generally affect average family income in both rural and urban counties, the effect of many characteristics is substantially different in rural counties than in urban counties. Using the Oaxaca and Cotton-Neumark decomposition techniques, we find that only about half the income difference between rural and urban counties is explained by differences in their characteristics, however.