COWLES FOUNDATION FOR RESEARCH IN ECONOMICS
AT YALE UNIVERSITY

Box 208281
New Haven, CT 06520-8281

COWLES FOUNDATION DISCUSSION PAPER NO. 1030R

Poverty in Relation to Macroeconomic Trends, Cycles, and Policies

James Tobin

September 1992
Revised May 1993

This survey concludes that general prosperity and economic growth have been considerably less powerful engines of progress against poverty in the U.S. than they were before 1973. Macroeconomic performance has deteriorated, and its relation to poverty has weakened too. It is shown that the incidence of poverty can be fairly well explained by regressions on unemployment rates and real wages, both in national time series and in state cross-sections. Recent downward deviations from these regressions appear to reflect structural labor market changes that make poverty less treatable by macro medicine.