Department of Economics

Appalachian Poverty: Don’t fall for the Poverty Trap

Research completed by Duncan M. Young

Abstract of research: The United States Appalachian region has faced persistently high poverty rates since the 1950s. Previously proposed theories have suggested the existence of a poverty trap due to human capital deficiencies and resource curse as possible explanations. In this paper, I review past theories for Appalachian poverty and search for evidence of a poverty trap using panel data. I use county level data from 1970 to 2000 with each decade being a period. In a fixed effects panel model, I regressed poverty rate from the previous decade on the current poverty rate, holding constant human capital levels and mining employment. The results provide additional evidence to uphold past theories and show that, holding constant for human capital and mining employment, poverty tended to naturally decrease by 20 percent per decade during this period.