In these notes, I provide some general ideas on how to conceptualize poverty traps and speculate on their applicability to understanding Appalachian poverty. My goal is to stimulate thinking on Appalachia that exploits contemporary perspectives in economics on the sources of persistent poverty and inequality. To do this, I focus on both the theory of poverty traps as well as issues in the econometric assessment of their empirical salience.
Poverty
Measuring the economic status of low-income individuals and families is a central focus of poverty scholars and is at the fore of much public policy debate. The stakes are substantial as changes in poverty (and poverty thresholds) influence the scale and scope of redistributive tax and transfer programs at all levels of government.
UKCPR Director James Ziliak chaired a recent National Academies of Science, Engineering, and Medicine panel of experts that recommended that the current Official Poverty Measure used by the U.S. Census Bureau be replaced by a new measure called the Principal Poverty Measure, which is a revision to the alternative Supplemental Poverty Measure annually produced by Census. Among other changes, the panel recommended that the new measure incorporate health insurance and child care as a basic need, and revise how housing is valued as a need. Balancing those changes to the poverty thresholds, the panel recommended that subsidies for health insurance and child care provided by employers and the government be included as a household resource, as well as the implicit rental income derived from owner-occupied housing. The full report is available for free download at the National Academies, with a summary published in a 2024 issue of The ANNALS of the American Academy of Political and Social Science.
2010
What about these children? Assessing poverty among the 'hidden population' of multiracial children in single-mother families
Capturing the conditions of children of color living in single-parent families has become more complex due to the growing presence of interracial households. This analysis assesses the size and poverty status of single-female headed families housing multiracial children. Using data from the 2000 Census, we find that 9 percent of female-headed families house either children who are classified with more than one race or are classified as a single race different than their mother’s compared to only 3 percent of married couple families. Logistic regression analyses assessing the odds of poverty status for families finds that being a multiracial family does not constitute a uniform advantage or disadvantage for female headed households. Rather, these families, like most families of color, are more likely to experience poverty than white monoracial families. The two exceptions are White multiracial families who are more likely to be in poverty relative to this reference group and Asian multiracial families who have similar poverty rates as white monoracial families (and a lower rate than Asian monoracial families).
2009
Cities, economic development, and the role of place-based policies: Lessons for Appalachia
This paper surveys economic research on the association between economic development and urban areas, links this summary to some important trends in economic outcomes in Appalachia in recent decades, highlights areas in need of future research on the role of urban areas as engines of economic development in Appalachia, and discusses what types of place-based policies might be effective to promote economic growth and development in the Appalachian region.
Socioeconomic status, child health, and future outcomes: Lessons for Appalachia
Appalachians are in poor health relative to other Americans. For example, the ageadjusted all cause mortality rate for Appalachian in 2006 was over 900 per 100,000 compared to a rate of 760 per 100,000 for those outside of Appalachia. This essay shows that health disparities start before birth—the incidence of low birth weight is 90 1,000 in rural Appalachia compared to 83 per 1,000 outside the U.S. These disparities continue through childhood and into adulthood. Moreover, although African Americans are generally in poorer health relative to white Americans, disparities between Appalachia and the rest of the U.S. are much greater for whites. These disparities are not surprising given the continued poverty of Appalachia. This paper draws on the literature to discuss the likely consequences of these disparities for the future health and well being of Appalachia’s children.
Do adoption subsidies help at-risk children?
More than half a million children in the United States are currently in foster care, many of whom are at risk for long-lasting emotional and health problems. Research suggests that adoption may be one of the more promising options for the placement of these children. The Adoption Assistance and Child Welfare Act of 1980, which provided federal funds for monthly adoption subsidies, was designed to promote adoptions of special-needs children and children in foster care. Using data from the Adoption and Foster Care Analysis and Reporting Systems for 2000- 2006, I consider the effects of these adoption subsidies on children’s likelihood of being adopted, on time spent in foster care, and on the characteristics of adoptive families. Because subsidies may be determined endogenously, I employ an identification strategy that exploits state variation in the age at which children are eligible for federal subsidy funds. I find that foster children who are eligible for subsidies are more likely to be adopted, and that eligibility increases the hazard of discharge from foster care. Conditional on adoption, higher expected subsidies increase time to adoption finalization and increase the probability that a child is adopted by a relative such as a grandmother.
2008
The economic impact of child care subsidies for Kentucky
For parents of young children the decision to work strongly depends on the availability of affordable child care. Child care costs can take up a large portion of a family budget and may serve as an obstacle to work. In 2008 the National Association of Child Care Resource and Referral Agencies (NACCRRA) estimated that Kentucky families recently faced annual infant child care costs of $6,240 for full-time center care and $4,956 for school age children during non-school hours.2 These costs represent 20 to 25 percent of an average single mother’s annual income and rival the tuition costs of attending a 4-year college or university. In this policy brief, we describe the federal and state programs that address child care and discuss recent economic research on the links between parental employment and child care. In addition, we forecast the employment effects and costs of a child care subsidy in Kentucky.
Child care subsidies and the economic well-being of recipient families: A survey and implications for Kentucky
The purpose of this report is to provide a selective survey of the literature on the economic consequences of child care for recipient families, and to relate the results to families residing in Kentucky using data from the Annual Social and Economic Study in the Current Population Survey. The survey is selective both because of its exclusive focus on child care research by economists and because the literature is vast even within economics such that only articles deemed to be important contributions to the labor supply and child care literature are included. There are extensive literatures on child care in the fields of social work and sociology, but in a bid to narrow the focus on the types of questions and methodologies employed this survey excludes this research.
Homebuying in New Orleans before and after Katrina: Patterns by space, race, and income
Natural disasters can conceivably have significant impacts on the “neighborhood sorting” of different racial or economic groups across intrametropolitan space. Using Home Mortgage Disclosure Act data we examine mortgage-financed homebuying activity within the New Orleans MSA before and after Hurricane Katrina. We find that, while the total amount of homebuying in the 7-parish New Orleans MSA was relatively unchanged between 2004 and 2006, homebuying in the city declined significantly, and declined most in places experiencing severe storm damage. We also find that after Hurricane Katrina, the proportion of homebuyers in the region and the city who were African-American or low-income declined. Finally, we find that segregation levels of African-American and lower-income homebuyers declined in the year following Katrina. However, some of this effect is likely due to smaller overall numbers of lower-income and African-American buyers in the region.
2007
A state earned income tax credit: Issues and options for Kentucky
The federal Earned Income Tax Credit (EITC) has proven to be the most effective anti-poverty program for working low-income families in the United States. Established in 1975 to offset payroll taxes and to provide a modest supplement to low wages, the EITC is now a $40 billion program serving over 20 million Americans. Over the past decade, 22 states and the District of Columbia have reformed their tax codes to include a state EITC to offset state income tax liability, provide an additional financial boost to low-income working families, and lift families out of poverty while also offering an incentive to work. In this policy brief we discuss some of the issues and options of a state EITC for Kentucky.
Linking economic development and poverty: The role of innovation and innovation capacity in the South
While most economic development research views poverty as a sign of need for development or poverty reduction as an outcome of successful development, this study treats poverty as an independent variable alongside contemporary measures of innovation capacity that reflect state potential for economic development, examining the combined impact of poverty and innovation capacity on economic development outcomes. The study examines the effect poverty has on economic development outcomes given levels of innovation capacity, and the effect poverty has on formation of state innovation capacity. The methodology consists of pooled cross-sectional time-series analysis with panel corrected standard errors with lags. The findings show mixed support for the effect of poverty on innovation capacity formation, weak support for the negative direct effects of poverty on economic growth, and strong support confirming important differences between the south and the rest of the nation. Poverty appears to impact economic growth only indirectly through its effect on the components of capacity that lead to economic growth.