Explaining the Urban-Rural Export Gap: Evidence from U.S. Firms

The U.S. urban-rural export gap is important given the share of manufactured goods in exports, the rural concentration of manufacturing activity, and recent federal investments in place-based policy. These investments raise questions about the size of the export gap and whether it is explained by differences in endowments or inherent rural disadvantages. Confidential trade data linked with business survey data alongside county-level variables allow an Oaxaca-Blinder decomposition of the export gapUrban factors compensate for a less trade favorable industry mix, including the advantages of urban scale in export performance which may be insurmountable for rural areas.