Graduate Thesis Or Dissertation
 

Analysis of U.S. interstate variation in changes in poverty incidence and income inequality (1969-1979)

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  • 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.
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