Determinants of poverty in metropolitan and nonmetropolitan areas: an impirical study.

Author:Mustafa, Muhammad
Position:Report
 
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  1. INTRODUCTION

    South Carolina's Poverty rate has historically been higher than other southern states. The poverty rate in South Carolina was 17.1% in 2009. In comparision, the poverty rates were 14.3%, 16.6%, 16.2%, and 15.0%respectively for the United States, Georgia, North Carolina and Florida. The poverty rate has been higher in non-metropolitan areas than in metropolitan areas. The family poverty rate in metro areas was 10.65 percent in 1990 and declined to 9.83 in 2000, whereas the family poverty rate in non-metro areas were 16.31 percent and 15.37 percent in 1990 and 2000 respectively (Table 1). South Carolina is a relatively low-income state with the households with higher incomes concentrated in the metropolitan areas. During 1950-2000 South Carolina lagged U.S. and neighboring states such as Georgia and North Carolina.

    One of the objectives of this study is to identify the characteristics of a county that affect its poverty rate. The other objective is to identify the factors that are relatively more relevant for metropolitan areas and which are more important for non-metropolitan areas. Once the causes of poverty are identified, the policy makers can design the appropriate policy action to fight the poverty in a metropolitan and nonmetropolitan county. Lessons learned about family poverty in other states and regions may not apply to a non-metro county in South Carolina. It is appropriate to study poverty in a particular state rather than a region. No specific study examined the factors that influence the poverty in South Carolina.

    The rest of the paper is structured as follows. Section 2 presents the literature review. Section 3 outlines the methodology and describes the data. Section 4 reports the empirical results. Finally, Section 5 offers summary and concluding remarks.

  2. LITERATURE REVIEW

    The characteristics that affect the poverty have been investigated by many researchers such as Levernier (1996), Levernier and White (1998), Levernier et al (1995), Moen (1989), Danzigner (1988), Schiller (1989), Massey and Eggers (1990), Jensen and Tienda (1989), Sawhill (1988), Dudenheber (1994), Lichter and Eggebeen (1992), Tickamyer and Duncan (1990) and others. Most of these studies identified the factors that contribute to poverty rate.

    Glennerster (2000) explores the differences between different poverty studies and compares the methods with the experience of other countries. This paper discusses the contribution made by American social scientists to the study of poverty in the past 25 years. The first part of the article concentrates on the poverty measurement and the fact that the US poverty line remained unchanged in the period despite its increasingly important deficiencies. The second part traces the change of emphasis in US writing about poverty both in terms of academic emphasis and prescription. The final part considers the policy impact of American work on poverty policy beyond America (Glennerster (2000)).

    Devereux (2002) highlights distinctions between three determinants of poverty--low labor productivity, vulnerability, and dependency--and two categories of anti-poverty interventions--livelihood promotion and livelihood protection. Fisher and Weber (2004) examine why some U.S. households are asset poor, i.e., why households have insufficient resources to invest or to sustain household members at basic level during times of economic disruption. The central finding of the paper is that place of residence is an important determinant of asset poverty, above and beyond the influence of household characteristics. South, Crowder and Chavez (2005) examine differences in the patterns and determinants of residential mobility between high-poverty and lower-poverty neighborhoods among Latinos, blacks and Anglos.

    El-Osta and Morehart (2008) use the 2004 Agricultural Resource Management Survey and utilize regression to examine the determinants of poverty among the U.S. farm householders. The finding reveals the importance of the likelihood strategy that combines participation in government programs and off-farm work in lowering poverty rate. The results show the importance of educational attainment in mitigating poverty process, but only when the poverty is measured on a relative rather than an absolute basis. Their paper also provides the policy recommendations in the context.

    Rupasingha, Goetz (2007) contribute to basic knowledge of the structural determinants in the US by analyzing an expanded set of determinants of poverty, namely factors related to economic, social, and political influence using spatial data analysis techniques. Social capital, ethics and income inequality, local political competition, federal grants, foreign born population, and spatial effects are found to be important determinants of poverty in the US counties along with other conventional factors. Durlauf (2000) describes a particular perspective on the causes of poverty: a memberships based theory. The idea of this theory is that an individual's socioeconomic prospects are strongly influenced by the groups to which he is attached over the course of his life. Such groups may be endogenous; examples include residential neighborhoods, schools and firms. Other groups are exogenous, including ethnicity and gender.

    Hunt (2007) compares the nature and determinants of beliefs about the causes of both wealth and poverty, with special focus on race/ethnic differences. Findings support the separate treatment and examination of beliefs about wealth and poverty, and reinforce recent calls for greater attention to "nonwhites" in studies of sociopolitical attitudes. Madden (2003) examines changes in the spatial concentration of income and poverty within 27 large metropolitan areas (MSAs).

    Johnson (2007) applies recently developed innovations in poverty measurement and presents improved estimates of central-city poverty across time. Regionally, the results suggest that the elements of comprehensive income have their greatest impact on estimates of poverty in Southern central cities, while the central cities of the West are least affected. Wadsworth, Raviv, Reinhard, Wolff, Santiago, Einhorn (2008) tested a theoretical model positing that poverty has an...

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