Employment growth, social capital, and spatial determinants of poverty change

Graduation date: 2005This study models poverty changes across the United States between 1990 and 2000 as\ud a function of spatial poverty variables (variables that attempt to capture the spatial\ud effects of poverty and poverty changes), social capital, local employment growth, and\ud demographic controls. Newly available decennial census data at the tract level is used\ud to capture the benefits of a more homogeneous geographic aggregation. The spatial\ud variables account for the effects of own poverty, poverty pockets, and dynamic spatial\ud spillovers on poverty changes. Local economic and social context variables include\ud measures for social capital and employment growth. Spatial econometric model\ud formulations are compared with OLS, and results indicate that spillovers (a spatial lag\ud variable) as well as a spatial error correction are significant. Overall, being in a\ud poverty pocket (being surrounded by high poverty tracts) had a detrimental effect on\ud tract outcomes, while employment growth and social capital had positive ones.\ud Interaction terms are used in a second model to assess the effects of initial own\ud poverty level on poverty change determinants. Significant spatial lag and spatial error\ud correction parameters again indicate that the fates of neighboring tracts are tied\ud together. Results from the interaction model show that there are significant differences\ud in poverty determinants based on tract poverty rate at the beginning of the period.\ud Having higher levels of minorities or poverty pocket location had a negative effect on\ud poverty reduction in low poverty tracts, while college education rates had a positive\ud effect. Poverty reductions in high poverty tracts were speeded by employment growth\ud and social capital. The results suggest that anti-poverty policies, to be most effective,\ud need to be sensitive to the effects of geography, and that employment growth is\ud effective in reducing poverty, particularly in high poverty areas