Winning the War? New Evidence on the Measurement and the Determinants of Poverty in the United States

By Katharina Bergant, Anke Weber, Andrea Medici

January 14, 2022

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Katharina Bergant, Anke Weber, and Andrea Medici. Winning the War? New Evidence on the Measurement and the Determinants of Poverty in the United States, (USA: International Monetary Fund, 2022) accessed November 8, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

Using micro-data from household expenditure surveys, we document the evolution of consumption poverty in the United States over the last four decades. Employing a price index that appears appropriate for low income households, we show that poverty has not declined materially since the 1980s and even increased for the young. We then analyze which social and economic factors help explain the extent of poverty in the U.S. using probit, tobit, and machine learning techniques. Our results are threefold. First, we identify the poor as more likely to be minorities, without a college education, never married, and living in the Midwest. Second, the importance of some factors, such as race and ethnicity, for determining poverty has declined over the last decades but they remain significant. Third, we find that social and economic factors can only partially capture the likelihood of being poor, pointing to the possibility that random factors (“bad luck”) could play a significant role.

Subject: Consumption, Income, Machine learning, National accounts, Poverty, Poverty measurement, Technology

Keywords: Adjusted CPI-U, Consumption, Consumption poverty, CPI assumption, Determinants of poverty, Global, Income, Inequality, Inflation inequality, Machine learning, Poverty, Poverty indicator, Poverty measurement, Poverty threshold, Provision and Effects of Welfare Programs

Publication Details

Pages:

41
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2022/004
Stock No:

WPIEA2022004
ISBN:

9781616358365
ISSN:

1018-5941

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