Poverty and Income Transfer Policy at the State Level

Using data from the March Current Population Surveys, this paper provides mid-1980s poverty rates by state under four alternative measures of poverty: the official measure, prewelfare poverty, pretransfer poverty (federal and state transfers), and a new measure, pre-state-transfer poverty. It also analyzes state-by-state the antipoverty effectiveness of transfers. The results show considerable variation in poverty rates across states. A regression model is developed to analyze the sources of these differences. Most of the variation in poverty rates can be accounted for by per capita personal income, unemployment, and demographic variables including age, sex, and education of family head. POVERTY AND INCOME TRANSFER POLICY AT THE STATE LEVEL Analyses of poverty and antipoverty policy usually take a national perspective. ' State-by-state studies appear much less often. One reason is that policy proposals tend to focus on national approaches to poverty problems. A second important reason is the virtual lack of state data on poverty. The major source of state poverty data, the 1980 Census, provides information for income year 1979. This information has become badly outdated by the economic changes of the 1980s. The U.S. Bureau of the Census does not publish state estimates annually. This paper presents state poverty data for the mid-1980s and develops a simple regression model that accounts for much of the differences in poverty among the states. The findings will be helpful to persons interested in poverty and income support policy at the state level. In addition, the poverty indexes may be useful explanatory variables in comparative state analyses of policy issues. The paper first describes how the data were developed. It then explains the four alternative poverty measures used in the analysis, including one that appears for the first time in this paper, and the different types of information they yield.2 The findings include a descriptive table of poverty indexes, the regression model, and a comparison of the antipoverty impact of states' income support policies.