The Macroeconomy, Social Policies, and Poverty: Is the Relationship Different in Rural America?

Craig G. Gundersen, Iowa State University

A long economic expansion and changes in social programs were credited with the 25 percent decline in poverty in rural and non-rural areas from 1993 to 2001. Despite research indicating that the macroeconomy and social policies should have different effects in rural areas, little is known about whether this is the case, especially in recent years. I use a 15-year panel of state-level information (portraying conditions before 1993 and after 2001), broken down by metro status, to address this research lacuna. Using two poverty measures and three household-structure categories, I find several differences between rural and non-rural areas. In particular, a demand-side measure of employment (employment growth per capita) leads to declines in poverty in rural but not non-rural areas; poverty tends to be more persistent in non-rural areas; and welfare waivers lead to increases in poverty in rural areas but had no effect in non-rural areas.