Do Income Support Levels and Work Incentives Differ Between Rural and Urban Areas?

Do incentives to work differ between rural and urban low-income families? This paper examines the question using a combination of local and state data on benefit programs and taxes. Weighting state parameters by the rural and urban populations yields the average benefit and tax rate structure available to the typical rural and urban resident, respectively, over all states. Comparisons between the benefit/tax structures indicate that financial incentives to work are slightly higher in rural than in urban counties. Surprisingly, adjusting for housing costs, average real benefits and incomes are higher in rural than in urban counties and the advantage rises with earnings.