The Impacts of Unemployment on Alternative Poverty Rates

The analysis uses March Current Population Survey data to estimate state‐level cross‐section/time‐series models of the effects of the unemployment rate on alternative poverty rates. The measures include the official headcount rate, and alternatives based higher thresholds, revised equivalence scales and income defined as inclusive and exclusive of taxes and cash and in‐kind transfers. The estimated effects turn critically on the measurement approaches, both for the total sample population and for four population sub‐groups. For several alternative poverty rate measures, the unemployment rate has no significant impact on poverty. By contrast, real per‐capita median earnings have strong and consistently negative effects on the poverty rates of all groups studied. The findings thus provide important lessons for researchers exploring the links between economic conditions and poverty, and for policy makers developing poverty reduction strategies.