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Why Were Poverty Rates So High in the 1980s?

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  • Rebecca M. Blank

Abstract

This paper explores the relationship between the macroeconomy and the poverty rate. The first section provides evidence that poverty was far less responsive to macroeconomic growth in the 1980s than it had been in earlier decades. The section explores and rejects four reasons for this: It is not due to the exclusion of in-kind income from the data, to the regional location of the poor, to the public assistance changes of the early 1980s, or to the changing demographic composition of the poor. Instead, it is almost entirely due to declines in real wages that occur among low-wage workers over the 1980s. In fact, employment and weeks of work per year within low-income households expands more rapidly in the 1980s than in the 1960s. This is almost entirely offset, however, by declines in weekly earnings at the bottom of the income distribution. The result is that economic growth has been a far less effective anti-poverty tool over the past decade.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 3878.

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Date of creation: Oct 1991
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Publication status: published as Papadimitrious, Dimitri B. and Edward N. Wolff (eds.) Poverty and Prosperity in the US in the Late Twentieth Century. London: Macmillan Press, 1993.
Handle: RePEc:nbr:nberwo:3878

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  1. Rebecca M. Blank & Alan S. Blinder, 1985. "Macroeconomics, Income Distribution, and Poverty," NBER Working Papers 1567, National Bureau of Economic Research, Inc.
  2. Keane, Michael & Moffitt, Robert & Runkle, David, 1988. "Real Wages over the Business Cycle: Estimating the Impact of Heterogeneity with Micro Data," Journal of Political Economy, University of Chicago Press, vol. 96(6), pages 1232-66, December.
  3. Juhn, Chinhui & Murphy, Kevin M & Pierce, Brooks, 1993. "Wage Inequality and the Rise in Returns to Skill," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 410-42, June.
  4. Rebecca Blank, 1985. "Disaggregating the Effect of the Business Cycle on the Distribution of Income," Working Papers 569, Princeton University, Department of Economics, Industrial Relations Section..
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Cited by:
  1. Elizabeth T. Powers, 1995. "Inflation, unemployment, and poverty revisited," Economic Review, Federal Reserve Bank of Cleveland, issue Q III, pages 2-13.
  2. Barry Bluestone & Teresa Ghilarducci, . "Making Work Pay, Wage Insurance for the Working Poor," Economics Public Policy Brief Archive ppb_28, Levy Economics Institute.
  3. Julio J. Rotemberg, 1998. "Cyclical Movements in Wages and Consumption in a Bargaining Model of Unemployment," NBER Working Papers 6445, National Bureau of Economic Research, Inc.
  4. Greg J. Duncan & Timothy M. Smeeding & Willard Rodgers, 1991. "Whither the Middle Class'? A Dynamic View," Economics Working Paper Archive wp_56, Levy Economics Institute.
  5. David M. Cutler & Lawrence F. Katz, 1992. "Rising Inequality? Changes in the Distribution of Income and Consumption in the 1980s," NBER Working Papers 3964, National Bureau of Economic Research, Inc.
  6. Maury B. Gittleman & David R. Howell, 1992. "Job Quality, Labor Market Segmentation, and Earning Inequality: Effects of Economic Restructuring in the 1980s by Race and Gender," Economics Working Paper Archive wp_82, Levy Economics Institute.
  7. repec:ese:emodwp:em1-02 is not listed on IDEAS
  8. 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.
  9. Gundersen, Craig & Yanez, Mara & Valdes, Constanza & Kuhn, Betsey A., 2002. "A Comparison Of Food Assistance Programs In Mexico And The United States," Food Assistance and Nutrition Research Reports 33859, United States Department of Agriculture, Economic Research Service.
  10. Marlene Kim & Thanos Mergoupis, 1995. "The Working Poor and Welfare Recipiency," Economics Working Paper Archive wp_151, Levy Economics Institute.
  11. Gundersen, Craig & LeBlanc, Michael & Kuhn, Betsey A., 1999. "The Changing Food Assistance Landscape: The Food Stamp Program in a Post-Welfare Reform Environment," Agricultural Economics Reports 33993, United States Department of Agriculture, Economic Research Service.
  12. Jaynes, Gerald D., 2011. "Social Policy and U.S. Poverty 1960-1999: An Economic History," Working Papers 90, Yale University, Department of Economics.

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