Understanding Poverty

When government undertook to wage war on poverty in the prosperous United States of the 1960s, poverty was defined largely in terms of income. Poor people were perceived as differing from the rest of society primarily in their lack of money, and the apparent solution was to correct the income shortfall in a simple, efficient, and standardized manner. But decades of research and experience with antipoverty programs have made it clear that poverty involves very complex, interrelated and sometimes intractable socioeconomic, family, and individual issues. Understanding of these issues at the root of poverty is at the heart of IRP's institutional purpose.

To assess our current state of knowledge, IRP in May 2000 sponsored a national conference at which experts in various areas presented papers on poverty trends and on particular issues such as the low-wage labor market, employment and training programs, income support programs and welfare reform, family well-being, housing, and health care. Papers presented at the conference are summarized in the Fall 2000 issue of Focus. Revised papers were published as a monograph in 2001, Understanding Poverty, by Harvard University Press and the Russell Sage Foundation. Two earlier volumes have tracked poverty and poverty policy from the 1960s on; Fighting Povety: What Works and What Doesn't (1986), and Confronting Poverty: Prescriptions for Change (1994) are available from Harvard University Press.

IRP Discussion Papers, Reprints, and Books

A Critical Review of Rural Poverty Literature: Is There Truly a Rural Effect?
Bruce Weber, Leif Jensen, Kathleen Miller, Jane Mosley, and Monica Fisher

Poverty rates are highest in the most urban and most rural areas of the United States, and are higher in nonmetropolitan than metropolitan areas. Yet rural poverty has received less attention than urban poverty from both policymakers and researchers. We provide a critical review of literature that examines the factors affecting poverty in rural areas and conclude with suggestions for research. (DP1309-05)

Macroeconomic Performance and Poverty in the 1980s and 1990s: A State-Level Analysis
J. Iceland, L. Kenworthy, and M. Scopilliti

The authors examine the effect of macroeconomic performance on poverty in the United States during the 1980s and 1990s. Their study advances research on this issue in a variety of ways: they utilize variation across the states rather than relying on over-time trends for the country as a whole; they analyze cross-state variation in both levels and change over time and they disentangle the impact of three different aspects of macroeconomic performance: economic output (per capita gross state product), employment, and unemployment. (DP1299-05)

Income Transfers and Assets of the Poor
James P. Ziliak

This paper uses data from the Panel Study of Income Dynamics and a correlated random-effects Generalized Method of Moments estimator to decompose the rich-poor wealth-to-permanent income gaps into the portions attributable to differences in characteristics such as labor-market earnings, income uncertainty, observed demographics, and the utilization of transfer programs which may have stringent income and liquid-asset tests, and to differences in the estimated coefficients on the respective characteristics. (A revised version of DP 1202-99) (DP 1233-01)

Who Are the Asset Poor? Levels, Trends, and Composition, 1983-1998
R. Haveman and E. N. Wolff

The authors develop several measures of "asset poverty" and use them to document changes from 1983 to 1998 in the extent to which American households are unable to rely on an asset cushion to sustain themselves during temporary hard times. Despite massive growth in overall assets in the United States, the level of asset poverty has actually been rising. (DP 1227-01)

The Memberships Theory of Poverty: The Role of Group Affiliations in Determining Socioeconomic Outcomes
S. N. Durlauf

The memberships-based theory postulates that the socioeconomic prospects of individuals are strongly influenced by the groups to which they are attached over the course of their lives. The author outlines the theory, characterizes the empirical evidence in its support, and remarks on its implications for antipoverty policy. (DP 1221-01)

Income Transfers and Assets of the Poor
J. P. Ziliak

This study concludes that the underlying cause of the rich-poor gap is a difference in the ability to accumulate wealth. To enhance opportunities for the poor to accumulate wealth, policies should focus on reducing labor-income inequality. (DP 1202-99)

Has Macroeconomic Performance Regained Its Antipoverty Bite?
R. Haveman and J. Schwabish

RPT 820 (Contemporary Economic Policy, Vol. 18, no 4 [October 2000], pp. 415-427) .

Results of a study of the relationship between macroeconomic performance and the poverty rate. These estimates suggest that the weakened economic growth-poverty relationship that some researchers have identified may have been an aberration of the 1970s and 1980s, and that the expected relationship of the 1960s has again been reestablished in the 1990s.

The Twentieth-Century Record of Inequality and Poverty in the United States
R. Plotnick, E. Smolensky, E. Evenhouse, and S. Reilly

RPT 815 (The Cambridge Economic History of the United States, Vol. 3: The Twentieth Century, ed. Stanley Engerman and Robert Gallman [New York: Cambridge University Press, 2000], pp. 249-299).

Inequality in the United States peaked at the worst of the Depression, fell gradually as America climbed out of the Depression, and then fell abruptly as America plunged into World War II. After World War II inequality continued to trend downward, but at a much slower rate. During the 1970s, 1980s, and 1990s it rose, returning to its 1945 level. Beyond the rhythm associated with business cycles (including the Great Depression), we propose three broad sets of explanatory factors for these trends and cycles in the level of inequality. We also examine the relationship between inequality and the trends in poverty over the century.

Poverty and the Distribution of Economic Well-Being since the 1960s
Robert Haveman

RPT 809 (Economic Events, Ideas, and Policies: The 1960s and After, ed. George L. Perry and James Tobin [Washington, DC: Brookings Institution, 2000], pp. 243-298).

Reviews the evolution of thinking on and policy toward the problems of poverty and equality over the last forty years, discussing the facts of changing poverty and inequality patterns since the 1960s (and some of the factors underlying these changes).