Poverty rate and government income transfers: A spatial simultaneous equations approach
AbstractThe poverty rate and income transfer are clearly correlated. However, not much research has attempted to determine the causal linkage between the two. Previous research has primarily focused on the poverty-reducing impact of income transfer. In this paper, we apply a simultaneous equation system of spatial regressions to uncover the spatial pattern of the relationship between the poverty rate and income transfer, using a sample of 3,001 U.S. counties. The results are in line with theoretical expectations; they provide evidence of a significant simultaneity effect between the poverty rate and income transfer. Our findings also confirm the presence of significant spatial autocorrelation. Contrary to previous studies, we find that more generous counties tend to do a better job of reducing poverty and that counties with more poor tend to be less generous, creating incentive for the poor to participate in the labor force. Furthermore, counties located in devolution states perform better in both poverty reduction and income transfer. These findings are missing from extant literature that focuses only on the poverty-reducing impact of welfare payments.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by International Food Policy Research Institute (IFPRI) in its series IFPRI discussion papers with number 1076.
Date of creation: 2011
Date of revision:
endogeneity; income transfer; Poverty; SHAC; spatial econometrics;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-04-30 (All new papers)
- NEP-GEO-2011-04-30 (Economic Geography)
- NEP-URE-2011-04-30 (Urban & Real Estate Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Hilary Hoynes, 1993.
"Welfare Transfers in Two-Parent Families: Labor Supply and Welfare Participation Under AFDC-UP,"
NBER Working Papers
4407, National Bureau of Economic Research, Inc.
- Hoynes, Hilary Williamson, 1996. "Welfare Transfers in Two-Parent Families: Labor Supply and Welfare Participation under AFDC-UP," Econometrica, Econometric Society, vol. 64(2), pages 295-332, March.
- Jeanty, P. Wilner & Partridge, Mark & Irwin, Elena, 2010. "Estimation of a spatial simultaneous equation model of population migration and housing price dynamics," Regional Science and Urban Economics, Elsevier, vol. 40(5), pages 343-352, September.
- Robert F. Schoeni & Rebecca M. Blank, 2000.
"What has Welfare Reform Accomplished? Impacts on Welfare Participation, Employment, Income, Poverty, and Family Structure,"
NBER Working Papers
7627, National Bureau of Economic Research, Inc.
- Robert F. Schoeni & Rebecca M. Blank, 2000. "What Has Welfare Reform Accomplished? Impacts on Welfare Participation, Employment, Income, Poverty, and Family Structure," Working Papers 00-02, RAND Corporation Publications Department.
- Schoeni, R.F. & Blank, R.M., 2000. "What Has Welfare Reform Accomplished? Impacts on Welfare Participation, Employment, Income, Poverty, and Family Structure," Papers 00-02, RAND - Labor and Population Program.
- Kelejian, Harry H. & Prucha, Ingmar R., 2004. "Estimation of simultaneous systems of spatially interrelated cross sectional equations," Journal of Econometrics, Elsevier, vol. 118(1-2), pages 27-50.
- Laura A. Reese, 2006. "Not Just Another Determinants Piece: Path Dependency and Local Tax Abatements," Review of Policy Research, Policy Studies Organization, vol. 23(2), pages 491-504, 03.
- Kelejian, Harry H. & Prucha, Ingmar R., 2007. "HAC estimation in a spatial framework," Journal of Econometrics, Elsevier, vol. 140(1), pages 131-154, September.
- Linda Lobao & David Kraybill, 2009. "Poverty and Local Governments: Economic Development and Community Service Provision in an Era of Decentralization," Growth and Change, Gatton College of Business and Economics, University of Kentucky, vol. 40(3), pages 418-451.
- Caminada, Koen & Goudswaard, Kees & Koster, Ferry, 2010.
"Social income transfers and poverty alleviation in OECD countries,"
20733, University Library of Munich, Germany.
- Caminada, Koen & Goudswaard, Kees & Koster, Ferry, 2010. "Social Income Transfers and Poverty Alleviation in OECD Countries," MPRA Paper 27345, University Library of Munich, Germany.
- Christopher H. Wheeler, 2001. "A Note on the Spatial Correlation Structure of County-Level Growth in the U.S," Journal of Regional Science, Wiley Blackwell, vol. 41(3), pages 433-449.
- Gebremeskel H. Gebremariam & Tesfa G. Gebremedhin & Peter V. Schaeffer & Randall W. Jackson, 2008. "A Simultaneous Spatial Panel Data Model of Regional Growth Variation: An Empirical Analysis of Employment, Income, Migration and Local Public Services," Working Papers e07-12, Virginia Polytechnic Institute and State University, Department of Economics.
- Hilary W. Hoynes & Marianne E. Page & Ann Huff Stevens, 2006.
"Poverty in America: Trends and Explanations,"
Journal of Economic Perspectives,
American Economic Association, vol. 20(1), pages 47-68, Winter.
- Dierk Herzer & Rainer Klump, 2010. "Poverty and government transfers in the United States," Applied Economics Letters, Taylor & Francis Journals, vol. 17(16), pages 1565-1569.
- Kelejian, Harry H & Prucha, Ingmar R, 1998. "A Generalized Spatial Two-Stage Least Squares Procedure for Estimating a Spatial Autoregressive Model with Autoregressive Disturbances," The Journal of Real Estate Finance and Economics, Springer, vol. 17(1), pages 99-121, July.
- Mark D. Partridge & Dan S. Rickman, 2008. "Distance From Urban Agglomeration Economies And Rural Poverty," Journal of Regional Science, Wiley Blackwell, vol. 48(2), pages 285-310.
- Timothy Besley & Robin Burgess & Imran Rasul, 2003. "Benchmarking government provision of social safety nets," Social Protection Discussion Papers 27870, The World Bank.
- Haddad, Lawrence James & Zeller, Manfred, 1996. "How can safety nets do more with less?," FCND discussion papers 16, International Food Policy Research Institute (IFPRI).
- Lars Osberg, 2000. "Poverty in Canada and the United States: measurement, trends, and implications," Canadian Journal of Economics, Canadian Economics Association, vol. 33(4), pages 847-877, November.
- Harrell Rodgers, 2005. "Evaluating the Devolution Revolution -super-1 ," Review of Policy Research, Policy Studies Organization, vol. 22(3), pages 275-299, 05.
- Ulimwengu, John M. & Kraybill, David S., 2004.
"Poverty Over Time And Location: An Examination Of Metro-Nonmetro Differences,"
18908, Oregon State University, Rural Poverty Research Center (RPRC).
- John M. Ulimwengu & David S. Kraybill, 2004. "Poverty over Time and Location: An Examination of Metro-Nonmetro Differences," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(5), pages 1282-1288.
- Barrett, Christopher B. & Swallow, Brent M., 2006. "Fractal poverty traps," World Development, Elsevier, vol. 34(1), pages 1-15, January.
- Lung-fei Lee, 2003. "Best Spatial Two-Stage Least Squares Estimators for a Spatial Autoregressive Model with Autoregressive Disturbances," Econometric Reviews, Taylor & Francis Journals, vol. 22(4), pages 307-335.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.