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Macroeconomic Performance and the Poverty Rate: A Return to Normalcy?

  • R. Haveman
  • Schwabish J.

Since the mid-1980s, several important studies have established the statistical relationship between the poverty rate and overall economic performance. Most of these studies focused on the apparent break in this relationship beginning in the late 1970s or early 1980s. In this paper, we present the results of our study of the relationships reported in these studies, using annual time-series data on macroeconomic variables such as the unemployment rate and per capita GDP growth from 1959 through 1997. Like these earlier studies, we too find that economic performance seems to have had a smaller antipoverty effect during the 1970s and 1980s than it did in earlier years. However, our estimates suggest that the weakened growth-poverty relationship may have been an aberration of this period, and that the “normal” relationship of the 1960s has again been reestablished in the 1990s. This is true even after accounting for changes in earnings inequality over the entire period.

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Paper provided by University of Wisconsin Institute for Research on Poverty in its series Institute for Research on Poverty Discussion Papers with number 1187-99.

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Handle: RePEc:wop:wispod:1187-99
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  1. Rebecca M. Blank & Alan S. Blinder, 1985. "Macroeconomics, Income Distribution, and Poverty," NBER Working Papers 1567, National Bureau of Economic Research, Inc.
  2. Elizabeth T. Powers, 1995. "Growth and poverty revisited," Economic Commentary, Federal Reserve Bank of Cleveland, issue Apr.
  3. Rebecca M. Blank & David Card, 1993. "Poverty, Income Distribution, and Growth: Are They Still Connected," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 24(2), pages 285-340.
  4. Lerman, Robert I, 1996. "The Impact of the Changing US Family Structure on Child Poverty and Income Inequality," Economica, London School of Economics and Political Science, vol. 63(250), pages S119-39, Suppl..
  5. James Tobin, 1993. "Poverty in Relation to Macroeconomic Trends, Cycles, and Policies," Cowles Foundation Discussion Papers 1030R, Cowles Foundation for Research in Economics, Yale University.
  6. 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.
  7. 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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