Matteo Ricci College
Poverty Education Center

PEC Blog Post

  • Economic growth does not automatically mean poverty reduction

    A new study from the Economic Policy Institute reports findings on how economic growth is not a panacea to reduce poverty. As an article in the New York Times explains,

    "From 1959 to 1973, a more robust United States economy and fewer people living below the poverty line went hand-in-hand. That relationship broke apart in the mid-1970s. If the old relationship between growth and poverty had held up, the E.P.I. researchers find, the poverty rate in the United States would have fallen to zero by 1986 and stayed there ever since."

    That is not what happened, of course. The lesson this article takes from the evidence is that policymakers need to rethink poverty reduction:

    "If you want to address poverty in the United States, it’s not enough to say that you need to create better incentives for lower-income people to work. You also have to devise strategies that make the benefits of a stronger economy show up in the wages of the people on the edge of poverty, who need it most desperately."

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