Structural Change and the Aggregate Poverty Rate

This paper measures the extent to which recent increases in the aggregate poverty rate are attributable to the changing distribution of employment across industries. We decompose the total poverty rate change over the 1976-1983 period into components attributable to changes in employment shares and changes in the incidence of poverty within industries. Our results show that the poverty rate increase resulted primarily from the decline in employment rates in general and from increases in the incidence of poverty within all industries, rather than from the shift of employment opportunities between sectors. The growth of service sector employment in particular has not contributed to the increased incidence of poverty in the United States.