This chapter examines economic conditions in tribal areas located throughout the continental United States (the “lower 48 states”). Focusing on 100 tribal lands with populations of at least 500 persons, 1 the chapter uses a unique, cross-sectional tribal data set to compare economic conditions in tribal areas with conditions in other areas of the country. The tribal database, which contains information on economic conditions and housing on tribal lands, casino gaming, tribal landownership, and tribal area government institutions, is also used to evaluate the broad determinants of income and employment levels across tribal areas. The major findings are summarized below.
Comparison of the 100 tribal areas to both the country as a whole and other rural (non-metropolitan) locations suggests that tribal lands generally fare worse than do other areas. Income levels, educational attainment at both the high school and college levels, levels of employment, and rates of homeownership in tribal areas fall substantially below both nationwide averages and averages for other rural areas of the country. Across the major regions, economic conditions tend to be relatively worse in tribal areas located in the Southwest, the Mountain West, and the Great Plains. 2 Tribal areas located in those regions have lower income levels, lower rates of employment, and lower levels of educational attainment than do tribal lands located in other regions.
Correlation analyses (bivariate correlations) indicate that two key indicators of economic performance in the 100 tribal areas—per capita income and employment rates—have a high negative correlation with American Indian share of the population, share of the population under age 18, percentage of trust land that is tribal controlled, and share of employment in the federal government. High positive correlates of both per capita income and employment rates include labor force participation shares, share of land that is fee simple, share of the population that is over age 65, share of the population with a high school or college education, density of highways per square mile, and share of employment in manufacturing.
The multivariate statistical analysis of the determinants of per capita income across tribal areas suggests that economic and demographic factors accounting for income variation include regional location, share of employment in the agricultural and natural resource sectors, share of employment in the federal government, labor force participation rates, and population density (market size). Percentage of a tribal area population that is American Indian is also a significant factor: tribal lands with higher American Indian population shares 154tend to have significantly lower incomes than do other tribal areas, even after controlling for other factors.
A similar multivariate statistical analysis of the determinants of employment rates across the 100 tribal areas suggests that key factors include location in an isolated rural area, share of the population under age 18 (i.e., percentage of the population consisting of dependent children), presence of natural amenities, population density, and share of employment in the federal government. As with income levels, the percentage of the population that is American Indian is also a significant factor in accounting for variation in employment levels; tribal areas with higher shares of American Indian population have lower levels of employment, even after controlling for other influences.
Further analyses of the economic effects of tribal-specific factors, including the presence of a tribal casino and casino revenue, the nature of tribal area landownership, and the nature of tribal governmental institutions, suggest that a number of these factors play a significant role in accounting for variation in levels of per capita income and employment. In particular, tribal areas with higher amounts of casino revenue have higher levels of income and employment than do other tribal lands. Tribal areas with strong governmental institutions, including a strong executive or a strong legislature, also show higher levels of income and employment. The nature of landownership is only marginally significant in accounting for variation in tribal income and employment levels.
The general findings on the economic and demographic determinants of tribal income and employment levels suggest that economic diversification away from reliance on agriculture and natural resources and the federal government may improve income and employment prospects in tribal areas. However, areas with high percentages of American Indian population may still require additional economic development assistance after economic diversification occurs.
The findings on tribal-specific factors reinforce previous research by the Harvard Project on American Indian Economic Development, suggesting that institutional structure is a key factor for economic improvement in tribal areas. The findings also reinforce efforts aimed at development of casino gaming in tribal areas as a viable tribal economic development strategy. We are not suggesting that gaming is the solution to tribal economic development, but rather that our findings show an association between gaming and tribal economic improvement.