POVERTY AND ECONOMIC GROWTH: TRICKLE DOWN PETERS OUT

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Abstract

Previous studies have found that economic growth tends to “trickle down” to poor families. This study investigates whether use of a relative definition of poverty eliminates the impact of economic growth on the incidence of poverty of various demographic groups and whether a decrease in the impact of growth has occurred since 1964. With the exception of families with male heads, economic growth no longer affects poverty irrespective of whether a relative or absolute definition of poverty is used. Our findings indicate that the contribution of growth has been overstated, that much of the past success has been illusory, and that poverty will be more intractable in the future.

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