poverty in america

The World Bank defines, “poverty is powerlessness, lack of representation and freedom�. Thus poverty is an important and emotional issue. The ubiquitous presence of poverty in the developing world is nothing unique. What is unprecedented is the incidence of poverty in USA; the recent paper by Hoynes et al. examines the issue.

They scrutinize the trends of poverty rates in the last three decades in America. Relative to the large decline that was experienced during the 1960’s, poverty rates have changed very little over the past three decades. They find a weak relationship between poverty and the macro-economy over time. However, in spite of this, changes in labor market opportunities predict changes in the poverty rate rather well. Holding all else equal, they found, changes in female labor supply should have reduced poverty further, but an increase in the rate of female headship may have worked in the opposite direction.

They raise some further research questions, what are the relationships between women’s labor force participation, female headship, and labor market opportunities for women, and poverty rates? Many analyses have linked two or three of these factors, but there may be important interactions between all of these that help determine the evolution of poverty rates. A related question is why rising women’s labor force participation prior to 1980 does not push down poverty rates. Finally, what explains the change in the responsiveness of poverty to macroeconomic indicators starting in the 1980s?