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July 1989, Vol. 112, No. 7
How much poverty is reduced by State income transfers?
Robert D. Plotnick
Analyses of interstate poverty and antipoverty policies are scarce. One reason, of course, is the meager data on State poverty. Another reason is that antipoverty policy proposals tend to focus on national approaches to the poverty problem.1 The major source of State poverty data, the 1980 Census, provides information on income for 1979. However, this information has become badly outdated by the economic changes of the 1980's.
This article presents State poverty data for the mid-1980's and uses them to derive and compare the impact of income transfer policies on poverty among the States. The article first describes how the data were developed. It explains the three alternative poverty measures used in the analysis and the different types of information they yield.2 Then, the poverty indexes and the impact of income transfer policies on poverty are presented.
Data and methods
The basis for this analysis is the Current Population Survey (CPS), conducted monthly by the Bureau of the Census. Supplemental questions to the March CPS provide national and regional earnings data from which poverty data are derived. The information obtained is from the previous calendar year. However, one drawback is the fact that CPS samples at the State level are relatively small, with fewer than 1,000 households interviewed in most States. As a result, the estimated State poverty state rates for any single year may be subject to significant sampling error.
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1 For representative recent studies in this tradition, see Sheldon Danziger, "The Economy, Public Policy and the Poor," in Harrell Rodgers, ed., Beyond Welfare: New Approaches to the Problem of Poverty in America (Armonk, NY, M.E. Sharpe, 1988), pp. 3-13; Sheldon Danziger, Robert Haveman, and Robert Plotnick, "Antipoverty Policy: Effects on the Poor and Nonpoor," in Sheldon Danziger and Daniel Weinberg, eds., Fighting Poverty: What Works and What Doesn't (Cambridge, MA, Harvard University Press, 1987), pp. 50-77; and Greg Duncan, Years of Poverty, Years of Plenty: The Changing Economic Fortunes of American Workers and Families (Ann Arbor, MI, Institute for Social Research, 1984).
2 See Sheldon Danzinger and Christine Ross, "Poverty Rates by State, 1979 and 1985: A Research Note," Focus, Vol. 10, Fall 1987, pp. 1-5. Danziger and Ross used only one poverty measure, the official one.
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