Gary Hoover is an Assistant Professor in the Department of Economics, Finance, and Legal Studies at the University of Alabama. A graduate of the University of Wisconsin-Milwaukee, he holds a Ph.D. in economics from Washington University, St. Louis. He is interested in the relation of economic growth to poverty, and has co-authored two papers on that subject. One of them, forthcoming in the Journal of Income Distribution, examines the effect of growth on officially measured poverty and on a Sen index created by the authors. Professor Hoover will visit IRP during the week of March 18, 2002.
Charles E. Lewis, Jr., Senior Associate, Caliber Associates, Fairfax, VA, received his Ph.D. in Social Policy Analysis at Columbia University in June 2001. His principal research interest is in policies that affect low-income fathers and families. He has worked with Irwin Garfinkel and Ronald Mincy, both at Columbia, on the Fragile Families Project. He is currently working with Garfinkel and Bruce Western, Princeton University, on research that expands his dissertation topic, "The Negative Effects of Incarceration on Fathers in Fragile Families." He earlier received a Master's degree in clinical counseling from Clark Atlanta University. Dr. Lewis plans to visit IRP during the week of April 1.
Fisseha Tegegne is a Principal Investigator for the Cooperative Agricultural Research Program at Tennessee State University. His degrees include a B.A. in economics from Addis Ababa University, Ethiopia (1973), a M.Sc. in development economics from Strathclyde University, United Kingdom (1977), and a Ph.D. in resource economics from Michigan State University (1990). Dr. Tegegne's research interests center on welfare reform and food assistance, human resource economics, and economic development. His most recent research paper is titled "A County-Level Analysis of Food Stamp Caseload Changes in Tennessee." He plans to be in residence at the Institute during the week of May 13-17, 2002.
Below are brief reports on research projects of the 20012002 scholars that were current at the time of their visit.
Assistant Professor in the Department of Economics, Finance, and Legal Studies, University of Alabama
Poverty, nonwhite poverty, and the Sen index
Over the past forty years, considerable resources have been devoted to investigating the link between economic growth and poverty. Over this period, poverty has fallen dramatically, while the macroeconomy has seen periods of recession and robust growth. The relationship between robust economic growth and poverty has been one of great concern to policymakers and academics alike.
Early work showed that there was an inverse relationship between poverty and growth. During the 1960s real GDP increased by nearly 46 percent, and poverty fell by a half. In light of these advances, researchers were convinced that government policies aimed at increasing economic well-being would end poverty. However, beginning in the late 1970s, this relationship became less clear. Researchers began to reexamine the relationship between growth and poverty and questioned whether the "trickle-down" theory of antipoverty policy had run its course.
The 1980s saw a return of robust economic growth. Real per capita GDP rose by nearly 27 percent during this expansion, but it did not have the same antipoverty boost that accompanied the expansion of the 1960s. In fact, poverty fell by approximately 16 percent during this period. Economists speculated that during the 1980s expansion real wages of those persons in the lowest quintile of the population had been stagnant, robbing economic growth of its poverty-fighting attributes and causing poverty to be more intractable.
Researchers were very interested to see how poverty would be affected by the long and sustained period of robust growth that occurred during the 1990s. Some recent work examining the relationship between macroeconomic growth and poverty finds that this relationship is tenuous at best, and that it should be bolstered by policies targeting wage and education programs. In addition, these results are very sensitive to the distributional features of those in poverty.
Our research also examines the changes that occurred in the poverty rate using time series analysis that includes the most recent expansion of the 1990s. Our findings show that the expansion of the 1990s more closely resembles that of the 1980s than that of the 1960s, taking into account the fluctuations in real wages that occurred over the period. In addition, we show how this relationship could have been overlooked by previous researchers by using a distribution-sensitive measure of poverty, such as a Sen index. In essence we show that although overall poverty has fallen since the late 1950s, the composition of those left in poverty has changed dramatically, causing robust growth to be less effective in reducing poverty.
We also focus our attentions on a subset of the poverty population, namely nonwhites in poverty. We have two primary questions: (1) Do macroeconomic control variables affect this subset of the poverty population as they do the entire population? (2) Are these results sensitive to the distributional aspects of the subset when measured using a Sen index of poverty?
Relative to their starting point, this group has seen a tremendous fall in their poverty rate. One of the more striking differences between nonwhite poverty and aggregate poverty is the impact of the robust growth of the 1960s on the two samples. The statistically significant estimated coefficient of the 1960s expansion was much larger for overall poverty than for the nonwhite cohort. An important determinant of nonwhite poverty was the percentage of female-headed households, which increased dramatically over the sample period.
The poverty implications are clear: policies aimed at reducing poverty have to be cognizant that robust economic growth alone will not be sufficient to alleviate poverty and that some components of the poor are less able to enjoy the benefits of a robust economy. In addition, policymakers will need to be aware that not all groups that are in poverty respond in the same way, and that the nonwhite poverty population has been significantly affected by the dramatic increase in the number of households headed by females.
Senior Associate, Caliber Associates, Fairfax, VA
The negative effects of incarceration on fathers in fragile families
Studies of the effects of criminality on labor market productivity have sought to determine if sanctions caused by an individual's involvement with the criminal justice system significantly reduce opportunities for legitimate work. If so, are postrelease earnings reduced to such a degree that a convicted felon would choose to pursue criminal activity? Findings in this area have major relevance. Because of the tremendous growth in incarceration in the United States over the past three decades-from 300,000 in 1972 to more than 2 million at midyear 2001-large segments of the population have been economically weakened by linkage to the criminal justice system.
Another reason for studies of the impact of incarceration is to examine what part of the incarceration effect may be due to unobserved characteristics or heterogeneity. There is speculation that men who go to jail have other characteristics that may result in poor labor market outcomes after release. This study uses the rich data from the Fragile Families Project, which provided controls for more individual characteristics than previous studies, which generally controlled only for age, ethnicity, marital status, and education. To that we were able to add variables for substance abuse, mental health, and family background.
Findings on this subject have implications for policies designed to assist convicts seeking legitimate work after release. For example, if education and work history have little effect on wage and earnings, then traditional job skills programs may not be the answer to assisting these men in finding legitimate work. If lower wages and employment are due to family history and mental health, then psychological counseling may be a more effective means of addressing the deficits within this population. If incarceration has large negative effects on earnings, it may be wise to use alternative punishment for certain crimes.
Logistic regression models were used to determine the odds ratio on dichotomous dependent variables for fathers with a history of incarceration compared to those who were never incarcerated. Data from fathers were also used to measure the effects of the main independent variables on five continuous dependent variables measuring earnings and employment using ordinary least squares regression. A multinomial logistic regression model was used to determine the likelihood of incarcerated fathers being married or cohabiting at the birth of their child, compared to being in no relationship. The incarceration variables were retrospective and were asked of both mothers and fathers.
As predicted, fathers in the sample who were incarcerated at some point fared poorly on outcomes for employment and earnings. These fathers suffered substantial losses in earnings, weeks worked, and hours worked. After controlling for the father's characteristics, incarcerated fathers earned 53 percent less than never-incarcerated fathers, they worked four weeks less in the previous year, and averaged 3.5 less hours per week of work. The amount of time incarcerated significantly reduced the earnings of fathers in the sample; there was a 5 percent reduction in annual earnings for each month incarcerated. Regarding age of first incarceration, the data showed that incarceration between the ages of 17 years and 21 years significantly reduced earnings for incarcerated fathers.
Incarcerated fathers were 30 percent as likely to be married and 53 percent as likely to be cohabiting, after controlling for all characteristics. These findings on marriage and cohabitation support earlier research by Bruce Western and Sarah McLanahan on union formation. That is, economically challenged men are less likely to form stable or formal unions.
The study provided further documentation of the damaging effects of incarceration on the employment probabilities and earnings of imprisoned offenders. The effects varied over time, and the age of first incarceration was a significant predictor of employment and earnings losses. Further research should seek to add additional controls for unobserved heterogeneity. Policymakers should consider the consequences of incarceration's harmful effect and explore alternative means for sanctioning nonviolent offenders. Policymakers should also reconsider rehabilitation strategies to mitigate these effects.