Economic Growth and Poverty in the United States

Abstract

This paper estimates the income gap rations and Gini coefficients of poor Americans and combines them with official U.S. government poverty statistics to create a new time series of Sen indices of poverty. The effects of growth and other determinants of aggregate poverty are investigated for the period of 1961-1996. Holding other determinants of poverty constant, the results indicate that economic growth affects the Sen index and official U.S. government poverty statistics in essentially the same manner across time. The long economic expansion following the recession of 1981-1982 had much smaller poverty reducing effects than the expansion of the 1960s.