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APR: Spring 2020 Articles

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Rural Areas and Middle America See Smaller Employment Losses from COVID-19

Seung Jin Cho, Jun Yeong Lee, and John V. Winters
The ongoing COVID-19 pandemic is causing massive economic disruptions in the United States. Unemployment has hit record levels as businesses nationwide grapple with both mandatory and voluntary closures and dwindling patronage. However, certain factors, such as population density, have led to some parts of the country seeing higher unemployment levels. Cho, Lee, and Winters examine recent IPUMS data to find differences in unemployment levels between urban and rural areas and across US Bureau of Economic Activity regions and find that rural areas are seeing lower unemployment rates than urban areas, and the Plains region is seeing lower unemployment levels than areas than other USBEA regions.

Implications of Hong Kong’s Special Status Revocation for Agricultural Trade between the United States, Hong Kong, and Mainland China

Xi He and Wendong Zhang
In 1992, the United States granted Hong Kong status as a customs territory separate from mainland China. On June 29, 2020, however, the US Department of Commerce withdrew that status due to recent tensions between China and the United States. Hong Kong, as the world’s largest re-exporting port, plays a large intermediary role in US-China trade, and the revocation of its special status may provoke China into taking retaliatory economic and/or political actions. He and Zhang examine trends in Hong Kong’s import/export of US agricultural products and how that trade may be affected. They find that the revocation itself is not likely to directly affect US-China agricultural trade prospects much if neither China nor the United States responds with further actions.

Agriculture under the Specter of COVID-19

Lee Schulz and Chad Hart
Just like other sectors of the economy, the US agricultural sector has seen an economic downturn due to the COVID-19 pandemic. As various economic sectors resume activity, businesses are adjusting to living with the virus. Agricultural producers and USDA are reevaluating commodity markets and changing outlooks for the rest of the year. Schulz and Hart compare USDA’s meat, corn, and soybean projections from January 2020 with the most recent update, released in mid-June 2020, and find that the outlook changes are much more concentrated on prices than production.

Does Rural Broadband Expansion Encourage Firm Entry?

Yulong Chen, Liyuan Ma, and Peter F. Orazem
The federal government has invested $60 billion thus far in rural broadband deployment, and, recently, FCC chairman Ajit Pai launched the Rural Digital Opportunity Fund, which will add up to $20.4 billion to further expand broadband in underserved rural areas. However, broadband expansion may not reverse the decades-long population shift from rural to urban markets and it does not affect all economic sectors equally. Chen, Ma, and Orazem look at the overall effect of broadband on net rural firm entry and find that the construction, manufacturing, wholesale trade, real estate, and arts and entertainment industries see the most positive benefits, but the broadband effect is too small to reverse the 70-year long rural to urban shift in population and economic activity.

Large Hog Companies Gain from China’s Ongoing African Swine Fever

Chen-Ti Chen, Tao Xiong, and Wendong Zhang
Since November 2018, China has reduced its hog and sow inventory by almost 32% due to ongoing outbreaks of African swine fever. These reductions—103 million pigs and 8.7 million sows—account for more than one-fifth of the world’s hog inventory, but they may come as a blessing in disguise for large hog companies. Chen, Xiong, and Zhang examine stock returns for China’s 10 largest hog firms and 15 global hog firms and find that China’s hog companies saw positive abnormal stock returns following ASF outbreaks.