Targeting State Aid To Distressed Rural Communities

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Abstract
Recent rural economic problems have prompted some states to target economic development assistance to distressed rural areas. The most common way to target these programs has been to allocate aid based on unemployment rates. This may be a questionable practice, however, because the unemployment rate is a poor indicator of economic difficulty in many rural areas. This article assesses the strengths and weaknesses of alternative economic, social, and fiscal indicators that are available for allocating aid to distressed rural communities. It concludes with some specific suggestions for improving the effectiveness of state aid for distressed rural areas. Background information is provided concerning rural economic and fiscal difficulties in the 1980s and recent state initiatives.

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