To what extent did the economic boom of the 1990s-early 2000s improve the well-being of persons in the bottom rungs of the income distribution? This paper uses a pooled cross-state time series regression design to estimate the effect of earnings, unemployment, and inequality on poverty in the boom. I find that the tight labor market reduced poverty substantively, gainsaying the gloom that developed in the 1980s about the effect of economic growth on the less advantaged; and that socially undesirable behaviour also fell in the period, potentially due in part to the boom.. While the rising tide of economic progress can lift many boats, however, around 6-8% of Americans cannot be so helped, and thus constitute a relatively long term poverty population. Moreover, the level of the tide needed to improve the conditions of the less advantaged is a 4-5% unemployment rate, not the 6-6.5% unemployment once viewed as the NAIRU.
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number
8155.
Length: Date of creation: Mar 2001 Date of revision: Handle: RePEc:nbr:nberwo:8155
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