Measuring poverty cycles in the U.S. 1959–2013

Abstract

This paper aims to shed light on the nature of poverty as a dynamic process by examining poverty cycles, their magnitudes, and their asymmetry. The designated benchmark country is the USA due to the availability of time series data making comprehensive analyses possible. We use Harding and Pagan (2002) and the Cardinale and Taylor (2009) model to isolate poverty cycles in the U.S. during 1959–2013. Once isolated, we test the poverty cycles for duration dependency, and their synchronization with the U.S. business cycles observed over the same period. We find that poverty dynamics measured through poverty cycles differ for alternative poverty rate indicators. Another critical point is the magnitude of change in the poverty cycles. Prolonged and more volatile poverty cycles have a significant adverse impact on people and families facing them. That is particularly important for policymakers who should rethink poverty policy guidelines aimed at helping people with more volatile poverty cycles first. Our is the first study, to our knowledge, to isolate poverty cycles and focus on their nature. Poverty cycles should attract more attention from policymakers since they more accurately assess nations’ economic well-being than output (GDP).

Keyword : poverty cycles, poverty, duration dependence, turning points, amplitudes in poverty cycles, U.S.