Academic journal article Contemporary Economic Policy

An Analysis of Poverty in the American South: How Are Metropolitan Areas Different from Nonmetropolitan Areas?

Academic journal article Contemporary Economic Policy

An Analysis of Poverty in the American South: How Are Metropolitan Areas Different from Nonmetropolitan Areas?

Article excerpt

I. INTRODUCTION

Ever since President Lyndon Johnson's declaration of war on poverty in 1964, and perhaps as early as the publication in 1962 of Michael Harrington's influential book The Other America: Poverty in the United States, politicians and policy makers have sought to find ways to reduce America's poverty rate. A successful fight against poverty requires that the policy makers engaged in the fight understand the factors that adversely affect the poverty rate. Once these factors have been identified, policies can be enacted to change these factors in the direction that will induce a decrease in the poverty rate.

Within the United States, however, there has historically been substantial geographic variation in the poverty rate. For example, the poverty rate has tended to be higher in nonmetropolitan areas than in metropolitan areas and has tended to be higher in the South than in other regions of the country. (1) One possible explanation for these geographic differences is that a particular causal factor has a different effect on the poverty rate in metropolitan areas than in nonmetropolitan areas and has a different effect on the poverty rate in the South than elsewhere.

Because the South's poverty rate has historically been higher than that in other regions, the focus of this study is on the American South. The primary purpose of this study is to enhance our understanding of the causes of poverty in the South and of variations in the causes between metropolitan and nonmetropolitan areas in the South. Using counties in the South census region as the unit of observation, this author developed an econometric model that relates a county's family poverty rate to various characteristics of the county. The analysis has two objectives. The first is to identify those characteristics of a county that affect its family poverty rate and determine the strength of the effects. If these characteristics can be identified, policy makers engaged in the fight against poverty can focus their efforts on changing those characteristics that will induce a desired change in the county's poverty rate. The second objective is to identify which characteristics (if any), affect the poverty rate differen tly in metropolitan counties than nonmetropolitan counties. If differences exist, then a policy maker engaged in fighting poverty in a metropolitan county may need to implement a policy that focuses on changing one characteristic of a county, whereas a policy maker engaged in fighting poverty in a nonmetropolitan county may need to implement a policy that focuses on changing a different characteristic.

Historically, much of America's fight against poverty has relied on public assistance programs whereby payments, either in-kind or in the form of cash transfers, are given to low-income households. The major cash transfer program until 1996 was the Aid to Families with Dependent Children (AFDC) program. One of the major criticisms of the AFDC and other public assistance programs, however, is that they create severe work disincentives for potential recipients by paying the household not to work. The effectiveness of any poverty-fighting program will be dampened if the program contains work disincentives.

The 1996 Personal Responsibility and Work Opportunity Reconciliation Act abolished the AFDC program and replaced it with the Temporary Assistance to Needy Families (TANF) block grant to the states. These grants limit the length of time a household can receive benefits (the AFDC program did not) and require recipients to either be engaged in work activities (it is up to each individual state to define what is considered a work activity) or to receive job training or schooling. As such, TANF is designed to lower poverty without creating the work disincentives inherent in the AFDC program (see Blank, 2000, or Bruce, 2001, for a good description of the TANF program). Because the TANF program has been in existence for only a few years, mostly during a period when the nation enjoyed unprecedented economic prosperity, it is too early to ascertain its long-term effectiveness in fighting poverty. …

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