'Inability to Be Self-Reliant' as an Indicator of U.S. Poverty: Measurement, Comparisons, and Implications

Levy Economics Institute Working Paper No. 247

46 Pages Posted: 17 Sep 1998

See all articles by Robert Haveman

Robert Haveman

University of Wisconsin - Madison - Department of Economics; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics; CESifo (Center for Economic Studies and Ifo Institute)

Andrew Bershadker

U.S. Department of the Treasury, Office of Tax Analysis (OTA)

Date Written: August 1998

Abstract

The trend in national policy over the past two decades has emphasized self reliance and a smaller role for government in society. Given this ideological shift, the Official poverty measure, which is based on the premise that all families should have sufficient income from either their own efforts or government support to boost them above a family-size-specific threshold, appears to have less policy relevance now than in prior years. In this paper we present a new concept of poverty, Self-Reliance poverty, which is based on the ability of a family, using its own resources, to support a level of consumption in excess of needs. This concept closely parallels the "capability poverty" measure that has been proposed by Sen. We use this measure to examine the size and composition of the Self-Reliant poor population from 1975 to 1995. We find that Self-Reliance poverty has increased more rapidly over the 1975-95 period than has Official poverty. We find that families commonly thought to be the most impoverished ?those headed by minorities, single women with children, and individuals with low levels of education? have the highest levels of Self-Reliance poverty. However, these groups have also experienced the largest increases in this poverty measure. Families largely thought to be economically secure, specifically those headed by whites, men, married couples, and highly educated individuals, while having the lowest levels of self-Reliance poverty, have also experienced the largest increases in that measure. We speculate that the trends in Self-Reliance poverty stem largely from underlying trends in the United States economy, in particular the relative decline of wage rate for whites and men, and the rapidly expanding college-educated demographic group.

JEL Classification: H53

Suggested Citation

Haveman, Robert H. and Bershadker, Andrew, 'Inability to Be Self-Reliant' as an Indicator of U.S. Poverty: Measurement, Comparisons, and Implications (August 1998). Levy Economics Institute Working Paper No. 247. Available at SSRN: https://ssrn.com/abstract=121632 or http://dx.doi.org/10.2139/ssrn.121632

Robert H. Haveman (Contact Author)

University of Wisconsin - Madison - Department of Economics ( email )

1180 Observatory Drive
Madison, WI 53706
United States
608-263-7398 (Phone)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
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IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Andrew Bershadker

U.S. Department of the Treasury, Office of Tax Analysis (OTA)

1500 Pennsylvania Ave. NW
Washington, DC 20220
United States

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