POVERTY, GOVERNMENT TRANSFERS, AND THE BUSINESS CYCLE: EVIDENCE FOR THE UNITED STATES

Dierk Herzer and Rainer Klump

Applied Econometrics and International Development, 2009, vol. 9, issue 2

Abstract: We examine the impact of government transfers and the business cycle on poverty in the United States in the context of a poverty function that includes the official poverty rate, three types of government transfers, real wages, the number of female-headed families, and a business cycle variable. Using cointegration techniques, we find ? contrary to most previous studies ? that government transfer programs play an important poverty-reducing role. In addition, the findings suggest that the business cycle is one of the key variables in explaining poverty in the US. Furthermore, the empirical results show that the size and composition of public transfer payments change over the business cycle. We also find poverty to have a significant effect on government transfers, the business cycle, and the structure of households.

Keywords: Poverty; Government Transfers; Business Cycle; USA; Cointegration (search for similar items in EconPapers)
JEL-codes: C22 C32 E30 I38 (search for similar items in EconPapers)
Date: 2009
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Working Paper: Poverty, Government Transfers, and the Business Cycle: Evidence for the United States (2006)
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