By Diane Swanbrow
News and Information Services
America has long attracted the world’s huddled masses yearning to improve their lots.
But a U-M study, the first to compare poverty-escape rates in the United States and eight other Western, industrialized nations, shatters the myth that America offers the brightest hope to those at the bottom of the economic ladder.
European and Canadian low-income families with children are just as likely as their U.S. counterparts to escape from poverty—and much less likely to be poverty-stricken in the first place, according to the study, published in the August issue of the Journal of Population Economics.
The study also challenges the “no pain, no gain” theory that argues against generous social assistance programs and public safety nets for the poor—the theory that widespread poverty is a necessary trade-off for America’s dynamic economic system.
For the study, Greg J. Duncan, professor of economics and researcher at the Institute for Social Research, and colleagues analyzed economic data from nine countries: Canada, France, the Federal Republic of Germany, Finland, Ireland, Luxembourg, the Netherlands, Sweden and the United States.
They compared total family incomes of representative samples of the population in each country, using data from the Panel Study of Income Dynamics for the United States. In most cases, annual figures were available for at least a three-year period.
While 14 percent of U.S. families with children and 12 percent of Canadian families with children were persistently poor in the mid-1980s, with incomes less than half the median for the nation for three years in a row, the comparable figures in the European countries studied were 2 percent at most.
The persistent poverty rate among U.S. Black families with children was 42 percent, Duncan notes.
The study compared how many “near poor” families (incomes that are 40 percent to 50 percent of the median) escaped from poverty by the folloiwng year. Duncan and colleagues found that the 22 percent transition rate for U.S. families was not much different from that of many European countries.
“We’ve known for almost 20 years now that a substantial proportion of the American poor escape from poverty,” says Duncan. “What’s surprising is that there’s so much mobility in tradition-bound, class-conscious, welfare-state European countries.”
The results of the comparative study also make it clear that the most important difference between poverty in the United States and in other Western nations is that economic deprivation in the United States is not only much more prevalent, but much more severe.
Some 14 percent of U.S. families with children (and 37 percent of Black U.S. families with children) had incomes of less than 40 percent of the median. With the exception of Canada, all other countries had fewer than 5 percent of families with children falling into this most-deprived category.
The policy implications of the findings are significant, according to Duncan. “The belief that generous social assistance programs are a key impediment to economic mobility is not supported by these data,” he says. “Whatever disincentives these programs offer seem to be more than matched by other forces, including getting and losing jobs and marital partners, that are universal across Western countries.”
The research was sponsored by the Rockefeller Foundation, the Russell Sage Foundation and the European Science Foundation.
Duncan’s colleagues in the study are Bjorn Gustafsson of Gothenburg University, Richard Hauser of Frankfurt University, Gunther Schmauss of CEPS/INSTEAD in Luxembourg, Hans Messigner of Statistics Canada, Ruud Muffels of Tilburg University, Brian Nolan of Dublin’s Economic and Social Research Institute, and Jean-Claude Ray of the University of Nancy.
