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Trickling Down the Rising Tide: New Estimates of the Link between Poverty and the Macroeconomy
Author(s) -
Freeman Donald G.
Publication year - 2003
Publication title -
southern economic journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.762
H-Index - 58
eISSN - 2325-8012
pISSN - 0038-4038
DOI - 10.1002/j.2325-8012.2003.tb00575.x
Subject(s) - poverty , economics , poverty rate , unemployment , poverty reduction , unemployment rate , inequality , demographic economics , development economics , econometrics , macroeconomics , economic growth , mathematics , mathematical analysis
This paper uses pooled time‐series regressions of regional data to reexamine the link between poverty and the macroeconomy. The use of disaggregated data provides additional degrees of freedom and permits the inclusion of controls for demographic changes and increased income inequality. The results indicate a stronger relationship between poverty rates and the macroeconomy in the 1980s than that found in prior research and confirm that the dramatic reduction in unemployment during the late 1990s was instrumental in reducing poverty rates. The estimated results for the 1990s imply a 0.4‐0.9% increase in the poverty rate for each 1% increase in the unemployment rate.