Down from the Mountain

The Appalachian region has experienced persistently higher poverty and lower earnings than the rest of the United States. We examine whether lower skill differentials or differences in the returns to those skills lie at the root of the persistent Appalachian wage gap. Using Census data, we decompose the Appalachian wage gap using both mean and full distribution methods. Our findings suggest that significant upgrading of skills within the region has prevented the gap from widening over the last 30 years. Additionally we find that urban areas within Appalachia have not experienced the rise in returns to skills that have been exhibited in non-Appalachian urban areas. * Address correspondence to: James P. Ziliak, Department of Economics, 335 Gatton B&E Building, University of Kentucky, Lexington, KY 40506-0034; Email: [email protected] . We are grateful to Ken Sanford for excellent research assistance. We received many helpful comments on earlier versions of this paper from seminar participants at the Brookings Institution, Georgetown University, Georgia State University, Thirteenth Annual Society of Labor Economists Meetings, the 2008 Midwest Economics Association Meetings, University of California at San Diego, University College Dublin, University College London, and Queens University. This project was funded in part by a grant to the Center for Poverty Research from the Federal Reserve Bank of Cleveland. The opinions expressed herein are those of the authors and do not necessarily reflect the views of the Federal Reserve or any other sponsoring agency.