The Causes of Inner-City Poverty: Eight Hypotheses in Search of Reality

Abstract

Over the past 40 years, poverty among the inhabitants of U.S. inner cities has remained stubbornly resistant to public policy prescriptions. Especially for African Americans and Latinos, the gap between their economic well-being and that of the mainstream has widened despite persistent and repeated efforts to address the problem. At the same time, a continuing stream of research has sought to explain urban poverty, with a wide variety of explanations put forward as the basis for policy. This paper reviews that research, organizing it according to eight major explanations or hypotheses: structural shifts in the economy, inadequate human capital, racial and gender discrimination, adverse cultural and behavioral factors, racial and income segregation, impacts of migration, lack of endogenous growth, and adverse consequences of public policy. We conclude that all of the explanations may be relevant to urban poverty but that their significance and the degree to which they are well supported varies substantially.

JEL Classification: H59, H79