Are the Effects of the Macroeconomy and Social Policies on Poverty Different in Rural America?

The macroeconomy and social policies can have substantial influences on poverty in the United States. In this paper, I investigate whether these influences differ across metro and nonmetro areas. To do so, using a 16-year panel of state-level data, I estimate state and year fixed effects models separately for metro and nonmetro areas to see if the effects of the macroeconomy and social policies differ between these two areas. These models are estimated using two measures– the poverty rate and the squared poverty gap – and by family type. I find that cyclical forces have a much stronger effect on the poverty rate in nonmetro areas in comparison to metro areas but the effects are similar for the squared poverty gap; wage growth has a pronounced effect on poverty in metro areas but no effect in nonmetro areas; and state-level social policies have slightly larger effects in nonmetro areas but the effects are small.