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Rural Economic Development in the United States

An Evaluation of the U.S. Department of Agriculture's Business and Industry Guaranteed Loan Program

University of Chicago, jannaj{at}uchicago.edu

The U.S. Department of Agriculture's Business and Industry (B&I) Guaranteed Loan Program guarantees loans made by rural banks to rural businesses. The author evaluates B&I's effectiveness in increasing employment using basic ordinary least squares (OLS) and propensity score matching models. The author finds a robust association between loan reception and increased employment growth. A loan of $1,000 per capita is accompanied by a 3% to 6% increase in employment-per-capita growth and a 3% to 5% decrease in earnings-per-worker growth over the 2 years after the loan, leaving the effect on total county earnings indeterminate. The author concludes that the B&I loan program subsidizes loans associated with increased employment growth, although the jobs created are lower paying than average.

Key Words: USDA • program evaluation • rural economic development • guaranteed loans

This version was published on August 1, 2009

Economic Development Quarterly, Vol. 23, No. 3, 229-241 (2009)
DOI: 10.1177/0891242408331026


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