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Trickling Down the Rising Tide: New Estimates of the Link between Poverty and the Macroeconomy

  • Donald G. Freeman

    ()

    (Department of Economics and International Business, Sam Houston State University)

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    This paper uses pooled time-series regressions of regional data to reexamine the link between poverty and the macroeconomy. The use of disaggregated data provides additional degrees of freedom and permits the inclusion of controls for demographic changes and increased income inequality. The results indicate a stronger relationship between poverty rates and the macroeconomy in the 1980s than that found in prior research and confirm that the dramatic reduction in unemployment during the late 1990s was instrumental in reducing poverty rates. The estimated results for the 1990s imply a 0.4–0.9% increase in the poverty rate for each 1% increase in the unemployment rate.

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    Article provided by Southern Economic Association in its journal Southern Economic Journal.

    Volume (Year): 70 (2003)
    Issue (Month): 2 (October)
    Pages: 359-373

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    Handle: RePEc:sej:ancoec:v:70:2:y:2003:p:359-373
    Contact details of provider: Web page: http://www.southerneconomic.org/

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    1. R Haveman & J Schwabish, 2000. "Has Macroeconomic Performance Regained Its Antipoverty Bite?," Contemporary Economic Policy, Western Economic Association International, vol. 18(4), pages 415-427, October.
    2. Levy, Frank & Murnane, Richard J, 1992. "U.S. Earnings Levels and Earnings Inequality: A Review of Recent Trends and Proposed Explanations," Journal of Economic Literature, American Economic Association, vol. 30(3), pages 1333-81, September.
    3. Sawhill, Isabel V, 1988. "Poverty in the U.S.: Why Is It So Persistent?," Journal of Economic Literature, American Economic Association, vol. 26(3), pages 1073-119, September.
    4. William Levernier & Mark D. Partridge & Dan S. Rickman, 2000. "The Causes of Regional Variations in U.S. Poverty: A Cross-County Analysis," Journal of Regional Science, Wiley Blackwell, vol. 40(3), pages 473-497.
    5. Olivier Jean Blanchard & Lawrence F. Katz, 1992. "Regional Evolutions," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 23(1), pages 1-76.
    6. Hanratty, Maria J & Blank, Rebecca M, 1992. "Down and Out in North America: Recent Trends in Poverty Rates in the United States and Canada," The Quarterly Journal of Economics, MIT Press, vol. 107(1), pages 233-54, February.
    7. Donald G. Freeman, 2003. "Poverty and the Macroeconomy: Estimates from U.S. Regional Data," Contemporary Economic Policy, Western Economic Association International, vol. 21(3), pages 358-371, 07.
    8. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-38, May.
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