Economic Growth and Poverty in the United States: Comparisons of Estimates Based Upon Official Poverty Statistics and Sen's Index of Poverty

Abstract

This paper estimates income gap ratios 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 over the period 1961-1996. The results indicate that economic growth affects the Sen index and official poverty headcounts 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. In general, unemployment is a significant determinant of aggregate poverty, while the growth in per capita transfers to low income families and changes in the percent of families headed by females and never married females are insignificant.