STUDY OBJECTIVE: The main purpose of the study was to determine whether the health or economic status of a cohort of residents in an economically troubled geographical area changed between 1990 and 1993. DESIGN: Longitudinal, single cohort, interview survey method with the key variables of health status and economic status. Quasi-experimental pre-post design with economic rebound as the intervention. SETTING: A relatively low income geographical area in a rural, mountainous region before and after an economic rebound. In 1990, the local economy and health care system collapsed because of the closure of a series of manufacturing plants; outward migration from the area peaked. Between 1990 and 1993, new industries opened, and state and private community assistance programmes intervened, resulting in an economic rebound, migration into the area, and marked growth of the health service sector. PARTICIPANTS: A 2% sample of residents of households, using a combination of random, stratified, and clustered sampling. Residents included in the study had lived within the area throughout the 1990-1993 period of the study. MAIN RESULTS: Stable, non-migrating residents had a statistically significant 7% reduction in health status between 1990 and 1993, as measured by a composite of subjective and objective measures. The non-migrating residents also had a significant decrease in average household income ($14,700 in 1990 and $12,400 in 1993 in constant 1990 dollars) during the strong economic expansion, and therefore did not participate in or receive direct economic benefit from the expansion. There was a rapid population increase during the expansion, attributable to inward migrants who were younger and healthier than existing residents. The decline in health for the non-migrating residents was tentatively attributed to either direct or indirect effects of the decline in family income. CONCLUSIONS: Local economic development accompanied by expanded health care services availability can leave existing area residents poorer and less healthy, and this problem may be masked by an abundance of healthier, wealthier inward migrants.