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Content Inside: Working Paper No. 03-10-01 Examining the Relationship between the Poverty Rate and Economic Conditions: A Comparison of the 1980s and 1990s Gary A. Hoover and Geoffrey L. Wallace 2 Examining the Relationship between the Poverty Rate and Economic Conditions: A Comparison of the 1980s and 1990s Gary A. Hoover Department of Economics Finance and Legal Studies University of Alabama Geoffrey L. Wallace * La Follette School of Public Affairs University of Wisconsin October 2003 * Please address correspondences to: Hoover University of Alabama Department of Economics Finance and Legal Studies Box 870224 Tuscaloosa AL. 35487-0224. Phone: 205-348-6033. Fax: 205-348-0590 Email: ghoover@bama.ua.edu 3 Abstract In this paper we used regional level data on poverty rates to document the historic relationship between poverty rates and economic conditions. Our estimates indicate that poverty rates are very responsive to economic conditions in the period from the mid 1970s through the 1990s and that child poverty rates are more responsive to economic conditions than poverty rates among other groups of Americans. Although poverty rates were responsive to economic conditions across the entire sample period they appear to have been more influenced by economic conditions in the 1990s than in the 1980s. JEL: I30 I31 Keywords: Regional Poverty Economic Growth Child Poverty Rates Introduction 4 Historically robust economic growth has led to reductions in the poverty rate. In the 1980s this pattern changed. Despite the fact that Gross Domestic Product (GDP) grew at an average annual rate in excess of 4 percent between 1983 and 1989 the poverty rate declined only modestly and income for families in all but the highest quintiles stagnated. Researchers examining the relationship between macroeconomic conditions wages income distribution and poverty in the early 1990s concluded that the weakening relationship between growth and the poverty rate during the 1980s was primarily ...
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