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Macroeconomics, Income Distribution, and Poverty

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  • Rebecca M. Blank
  • Alan S. Blinder

Abstract

This paper investigates the impacts of macroeconomic activity and policy on the poverty population. It is shown that both the poverty count and the income share of the lowest quintile of income recipients move significantly with the business cycle. The differential impact of inflation versus unemployment on low income groups is analyzed at length.The evidence indicates that unemployment has very large and negative effects on the poor, while inflation appears to have few effects at all. In addition, changes in tax policy since 1950 have led to decreasing progressivity in the overall tax structure. Special attention is given to changes in the poverty rate over the past decade and to prospective changes in the remainder of the 1980s.

Suggested Citation

  • Rebecca M. Blank & Alan S. Blinder, 1985. "Macroeconomics, Income Distribution, and Poverty," NBER Working Papers 1567, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:1567
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    References listed on IDEAS

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    1. Bodie, Zvi, 1976. "Common Stocks as a Hedge against Inflation," Journal of Finance, American Finance Association, vol. 31(2), pages 459-470, May.
    2. Gary Burtless, 1983. "Why Is Insured Unemployment So Low?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 14(1), pages 225-254.
    3. Blinder, Alan S & Esaki, Howard Y, 1978. "Macroeconomic Activity and Income Distribution in the Postwar United States," The Review of Economics and Statistics, MIT Press, vol. 60(4), pages 604-609, November.
    4. W. H. Locke Anderson, 1964. "Trickling Down: The Relationship Between Economic Growth and the Extent of Poverty Among American Families," The Quarterly Journal of Economics, Oxford University Press, vol. 78(4), pages 511-524.
    5. Thornton, James R & Agnello, Richard J & Link, Charles R, 1980. "Poverty and Economic Growth: Trickle Down Has Petered Out," Economic Inquiry, Western Economic Association International, vol. 18(1), pages 159-163, January.
    6. Thornton, James R & Agnello, Richard J & Link, Charles R, 1978. "Poverty and Economic Growth: Trickle Down Peters Out," Economic Inquiry, Western Economic Association International, vol. 16(3), pages 385-394, July.
    7. Michael, Robert T, 1979. "Variation across Households in the Rate of Inflation," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 11(1), pages 32-46, February.
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