The latter, at least in Norway -- small settlements propped up by government spending.

http://www.idlewords.com/2010/07/mission_burfjord.htm

Search for "The social center of Burfjord" and read that paragraph and the next. Something like this might be necessary if the US government wants to keep Appalachia populated; I genuinely don't know if I'd support that goal or be indifferent to it.