The Rising Tide Lifts...?
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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- Raphael, Steven & WINTER-EBMER, RUDOLF, 1998.
"Identifying the Effect of Unemployment on Crime,"
University of California at San Diego, Economics Working Paper Series
qt5hb4h56g, Department of Economics, UC San Diego.
- David M. Cutler & Lawrence F. Katz, 1991. "Macroeconomic Performance and the Disadvantaged," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 22(2), pages 1-74.
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