Is a place better off with a bowling center, like this one in Muskegon, Michigan, or a pile of federal grants?
Photo: docksidepress

There were 566 counties that had more than 15 percent of their families in poverty in 1999. Most of these — 510 counties — were in rural America, and many had been persistently poor since the 1960s. Despite almost a decade of rapid economic growth nationally, one out of five U.S. counties still had a large number of its families living in poverty.

What was it about these places that kept them poor?

There are tons of theories about why some communities remain poor while others grow more economically vibrant. Two economists, Stephan Goetz and Anil Rupasingha, set out to find which social or political factors seem to have real effects on poverty and development in rural counties. They piled reams of data into their computers and began to sort out which seemed to matter. (Goetz heads the Northeast Regional Center for Rural Development at Penn State University.)

If anyone would like a copy of their results, you can either look for their paper in the Journal of Socio-Economics (Number 36, 2007, pages 650-671) or email me and I’ll send you a copy. ( But all readers may want to see the factors they tested and consisder how those factors tended to affect family poverty rates in rural communities:

“¢ Education. Education lowered poverty rates. However, education mattered more in cities than in rural areas. Having a high school degree or more schooling reduced family poverty rates to a greater degree in urban areas than in rural communities.

“¢ Inequality. Income inequality tended to make places poorer. Places with larger gaps between very rich and very poor had higher percentages of families living in poverty.

“¢ Big Box Stores. The more big box retailers like Wal-Mart there are in a community, the higher the family poverty rate. Many rural communities try to attract big box retailers. The two researchers conclude this strategy may be self-defeating.

A new Wal-Mart in Alabaster, Alabama. Not necessarily a good thing for the local economy.
Photo: dystopos

“¢ Social Capital. The researchers counted the places people might gather, socialize and work together (golf courses, bowling centers, civic associations, political organizations and clubs). They found that rural places with more of these meeting places and organizations had lower levels of family poverty. Social capital seemed to reduce poverty in rural America. This wasn’t true in the cities, where social capital had little effect on family poverty rates.

“¢ Foreign Born Residents. Here there is a mixed record. In the South, more foreign born residents are associated with higher rates of family poverty in rural areas. Outside the South, that is not true.

“¢ Race. The more racially mixed a county, the more likely it is to be poor.

“¢ Political Competition. Counties that are politically lopsided (where one party dominates) have higher rates of family poverty than those counties where the parties are in close competition.

“¢ Age. Counties with more children and a higher proportion of young adults had higher rates of family poverty.

“¢ Mobility. Counties with lots of “stayers” (long-term residents) have higher rates of poverty. Out-migration “is one path to reducing poverty,” according to the researchers.

“¢ Federal Grants. This one is interesting, given the contortions local governments go through to obtain federal grants. Higher levels of federal grant funding tend to make poverty worse. This surprised the researchers. They thought, perhaps, that grants were given to poorer counties, accounting for the associaton. But the effect remained no matter how they juggled the data and controlled for prior poverty.

Goetz and Rupasingha summarized their findings, writing that “counties with proportionately more high school graduates, higher employment rates and female labor force participation rates, more employment in manufacturing sector, more college graduates, and higher levels of social capital, had lower levels of poverty rates in 1999. On the other hand counties with more children, a higher number of permanent residents, higher income inequality, higher proportion of non-black minorities, greater ethnic diversity, higher proportion of young adults, and lower levels of political competition had higher levels of poverty in 1999.”

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