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Poverty, Prices, and Place: How Sensitive is the Spatial Distribution of Poverty to Cost of Living Adjustments?

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  • Dean Jolliffe

Abstract

This article examines how accounting for cost-of-living differences across metropolitan and nonmetropolitan areas affects measured rates of poverty. The spatial price index used is based on the Fair Market Rent data and was developed by the Census Bureau for use in its experimental poverty research program. Following U.S. federal definitions, poverty in nonmetro areas has been consistently higher than it has been in metro areas. Using the Fair Market Rent index to adjust for differences in cost of living results in a complete reversal of nonmetro-metro rankings in terms of prevalence, depth, and severity of poverty for every year examined (1991 to 2002). (JEL I32, R1, C81) Copyright 2006, Oxford University Press.

Suggested Citation

  • Dean Jolliffe, 2006. "Poverty, Prices, and Place: How Sensitive is the Spatial Distribution of Poverty to Cost of Living Adjustments?," Economic Inquiry, Western Economic Association International, vol. 44(2), pages 296-310, April.
  • Handle: RePEc:oup:ecinqu:v:44:y:2006:i:2:p:296-310
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    File URL: http://hdl.handle.net/10.1093/ei/cbj016
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    Cited by:

    1. repec:eee:wdevel:v:103:y:2018:i:c:p:297-310 is not listed on IDEAS
    2. Dorota Weziak-Bialowolska, 2016. "Spatial Variation in EU Poverty with Respect to Health, Education and Living Standards," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 125(2), pages 451-479, January.
    3. Francisco H. G. Ferreira & Shaohua Chen & Andrew Dabalen & Yuri Dikhanov & Nada Hamadeh & Dean Jolliffe & Ambar Narayan & Espen Beer Prydz & Ana Revenga & Prem Sangraula & Umar Serajuddin & Nobuo Yosh, 2016. "A global count of the extreme poor in 2012: data issues, methodology and initial results," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 14(2), pages 141-172, June.
    4. Chao Li & John Gibson, 2013. "Spatial Price Differences and Inequality in China: Housing Market Evidence," Working Papers in Economics 13/06, University of Waikato.
    5. John Gibson, 2016. "Poverty Measurement: We Know Less than Policy Makers Realize," Asia and the Pacific Policy Studies, Wiley Blackwell, vol. 3(3), pages 430-442, September.
    6. John A. Bishop & Jonathan M. Lee & Lester A. Zeager, 2017. "Incorporating spatial price adjustments in U.S. public policy analysis," Working Papers 438, ECINEQ, Society for the Study of Economic Inequality.
    7. Chao Li & John Gibson, 2014. "Spatial Price Differences and Inequality in the People's Republic of China: Housing Market Evidence," Asian Development Review, MIT Press, vol. 31(1), pages 92-120, March.
    8. Dorota Weziak-Bialowolska, 2016. "Spatial Variation in EU Poverty with Respect to Health, Education and Living Standards," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 125(2), pages 451-479, January.
    9. Elena Lasarte Navamuel & Dusan Paredes & Esteban Fernández Vázquez, 2012. "A true cost of living index for Spain using a microeconomic approach and censored data," Documentos de Trabajo en Economia y Ciencia Regional 26, Universidad Catolica del Norte, Chile, Department of Economics, revised Aug 2012.
    10. Edgar O. Olsen & Dirk W. Early & Paul E. Carrillo, 2010. "A Panel of Price Indices for Housing, Other Goods, and All Goods for All Areas in the United States 1982-2008," Virginia Economics Online Papers 377, University of Virginia, Department of Economics.
    11. Aaberge, Rolf & Langørgen, Audun & Mogstad, Magne & Østensen, Marit, 2008. "The Impact of Local Public Services and Geographical Cost of Living Differences on Poverty Estimates," IZA Discussion Papers 3686, Institute for the Study of Labor (IZA).
    12. Paola Annoni & Dorota Weziak-Bialowolska, 2016. "A Measure to Target Antipoverty Policies in the European Union Regions," Applied Research in Quality of Life, Springer;International Society for Quality-of-Life Studies, vol. 11(1), pages 181-207, March.
    13. Carrillo, Paul E. & Early, Dirk W. & Olsen, Edgar O., 2014. "A panel of interarea price indices for all areas in the United States 1982–2012," Journal of Housing Economics, Elsevier, vol. 26(C), pages 81-93.
    14. Riccardo Massari & M. Grazia Pittau & Roberto Zelli, 2010. "Does regional cost-of-living reshuffle Italian income distribution?," Working Papers 166, ECINEQ, Society for the Study of Economic Inequality.
    15. Andrea Brandolini, 2006. "Measurement of Income Distribution in Supranational Entities: The Case of the European Union," LIS Working papers 452, LIS Cross-National Data Center in Luxembourg.
    16. Jolliffe, Dean, 2006. "The Cost of Living and the Geographic Distribution of Poverty," Economic Research Report 7254, United States Department of Agriculture, Economic Research Service.
    17. Magne Mogstad, 2007. "Measuring Income Inequality under Restricted Interpersonal Comparability," Discussion Papers 498, Statistics Norway, Research Department.

    More about this item

    JEL classification:

    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics
    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access

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