Poster Paper: On Persistent Poverty In a Rich Country

Saturday, November 10, 2012 : 12:00 PM
Liberty A & B (Sheraton Baltimore City Center Hotel)

*Names in bold indicate Presenter

TMTonmoy Islam, Jenny Minier and James P. Ziliak, University of Kentucky

Despite robust economic growth in the post-War era, there remain deep pockets of persistent poverty in the United States. These persistently poor areas encompass five distinct regions and 11 percent of all U.S. counties. The regions differ greatly in racial, ethnic, geographic, and economic composition, yet share the enduring legacy of high poverty. We examine the origins of permanent income differences across counties using contemporaneous and historical county level Census data from 1890 to 2000.  Specifically we focus on whether persistent poverty emanates from contemporaneous differences in production technologies or factor endowments of labor and capital, or whether the historical roles of institutions, culture, geography, and endowments of human capital have placed these regions on divergent growth paths. We find evidence of significant regional differences in production technologies, but rates of convergence, which range from 7 to 9 percent, do not differ significantly between poor and non-poor regions. Nearly three-fourths of the income gap between persistently poor and nonpoor counties is accounted for by differences in factor endowments, especially human capital.  Illiteracy rates at the close of the 19th century are a key determinant of persistent poverty status at the close of the 20th century, suggesting long-term negative consequences for low initial human capital among persistently poor counties.