Abstract:
In spite of the rapid economic growth of the post-war era, there
has not been significant improvement in the incidence of poverty,
nor in the inequality of income distribution around the world, and
particularly in the developing countries. A reason for the apparent
failure of the poor to benefit from the effects of the post-war
economic growth, as a number of development economists have hypothesized,
lies in the structure of the economy. They argued that
when it comes to alleviating poverty or improving the distribution
of income, the type of growth is as important or more important
than the rate of growth.
The purpose of this study was to test the hypothesis on the
relationship among economic structure, poverty incidence, and income
inequality, by determining whether the changes in the structure of
the U.S. economy during 1969-1979 have had any impacts on the changes
in poverty incidence and income inequality in the states over the
decade. More specifically, the study sought to determine whether
the changes in the labor demand in a number of selected industries,
could explain the interstate variation in (1) changes in the poverty
incidence of different demographic groups, or (2) changes in the
share of income received by different family groups ranked by income.
Other factors such as transfer payments, migration, and unemployment
rate, were included in the models as control variables. A linear
multiple regression technique was applied in analyzing data from
the 5O states and District of Columbia, published by the Bureaus
of Census and of Economic Analysis.
The results from the estimation of the model indicated that, in
general, the models better explain the interstate variation in changes
in poverty incidence than they explain the changes in income inequality.
Changes in employment in agriculture sector were found
to be positively and significantly associated with changes in poverty
incidence for the nonelderly (negatively for the elderly) householders.
The reverse relationships were found to be true for tourism and convention
sector. Also found to be significant were the non-income
dependent transfer payments which are comprised of the social security
and other entitlement programs not dependent on income.
As far as changes in the shares of income to different family
groups are concerned, only the changes in labor demand in the agricultural
sector and changes in population used as proxy for migration
were found to be significant explanatory variables.
