Academic journal article Journal of Agricultural and Resource Economics

Persistent Pockets of Extreme American Poverty and Job Growth: Is There a Place-Based Policy Role?

Academic journal article Journal of Agricultural and Resource Economics

Persistent Pockets of Extreme American Poverty and Job Growth: Is There a Place-Based Policy Role?

Article excerpt

Over the past four decades almost 400 U.S. counties have persistently experienced poverty rates in excess of 20%. This raises the question of whether poverty-reducing policies should be directed more at helping people or helping the places where they reside. Using a variety of approaches, including geographically weighted regression analysis, we find that local job growth especially reduces poverty in persistent-poverty counties. Findings also show these counties do not respond more sluggishly to exogenous shocks. Finally, this analysis identifies some key geographic differences among persistent-poverty clusters. Taken together, place-based economic development has a potential role for reducing poverty in these counties.

Key words: economic development, geographically weighted regression, persistent poverty, place-based policies, poverty

Introduction

Despite significant progress in the 1960s, and two of the three longest U.S. economic expansions on record in the 1980s and 1990s, the 2004 U.S. Census Bureau poverty rate of 12.7% exceeded that registered in 1973 (11.1%).1 The poverty rate during the intervening three decades also has regularly been above 12.7%. More discouraging is that significant clusters of severe poverty continue to exist in the Mississippi Delta, the historic Southeastern Cotton Belt, areas near the Rio Grande, Central Appalachia, and Western American Indian reservations. Of just over 3,000 counties, 494 had a poverty rate exceeding 20% in 1999.

It is especially troublesome that most of these counties have persistently experienced high rates of poverty: 382 counties had poverty rates exceeding 20% in each of 1959, 1969, 1979, 1989, and 1999 (Miller and Weber, 2004). Easterly (2001) contends that most of these high-poverty clusters have many commonalities with "ethno-geographic poverty traps" found in developing countries (e.g., the Northeast of Brazil or the Chiapas in Mexico)-though it is likely the underlying dynamics differ. Indeed, the clusters in the Deep South have high Black population shares, those in the Southwest have high shares of Hispanics, while their counterparts in the West have high shares of Native Americans (USDA, 2004). Only the Appalachian/Highland group is characterized as having mostly Whites.

Despite occurring in such a wide variety of geographic clusters, the spatial dimension of persistent American poverty has rarely been empirically explored [Partridge and Rickman (2005) is an exception]. These clusters could suffer from many impediments including weak community capacity and governance, poor economic opportunities, and significant shortfalls of human and physical capital (Glasmeier and Farrigan, 2003). The rural nature and small scale of most persistently high poverty counties raise the issue of whether they can sustain significant economic activity. Also, job growth may have fewer antipoverty benefits in remote rural areas because of low levels of education, lack of formal childcare, and transportation constraints (Davis, Connolly, and Weber, 2003). Therefore, despite the attention given to poverty clusters in developing economies (e.g., Ravallion and Woden, 1999; Lucas, 2001), there is surprisingly little research on whether there is a role for place-based economic development policy in persistent pockets of American poverty. The answer would address whether antipoverty policies should focus primarily on directly helping people, or also on improving conditions in their place of residence.

To that end, this study examines poverty rate determinants using Census 2000 data for the approximately 3,000 U.S. counties. We first focus on differences between counties with persistently high poverty (PP) and remaining counties to examine if economic conditions have a stronger antipoverty impact in PP counties. If so, this would support those who argue that place-based economic policies are needed components of anti-poverty efforts. Then, once establishing differences between PP counties and non-PP counties, using geographically weighted regression (GWR) analysis, we assess the spatial differences in the underlying causes of poverty across the various persistent poverty clusters. …

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