GROWTH, INEQUALITY, AND POVERTY: A CAUTIONARY NOTE |
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Authors: | Eugene Smolensky Robert Plotnick Eirik Evenhouse Siobhan Reilly |
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Affiliation: | University of California at Berkeley;University of Washington, Seattle;University of Calijornia at Berkeley;University of California at Berkeley |
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Abstract: | Economic growth had less impact on poverty rates in the 1980s than in the 1960s. Could this be explained by Locke Anderson's observation that the higher median income, the greater the amount of growth needed to achieve a percentage point fall in the poverty rate? No, higher poverty rates are due instead to the rise in income inequality. With higher inequality, however, trickle down could be as effective in the 1990s as it was in the late 1960s. More generally, assessments of anti-poverty policy must recognize that inequality is as vital to changes in the poverty rate as growth in mean income. |
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