The Determinants of Poverty in Georgia's Plantation Belt: Explaining the Differences in Measured Poverty Rates

I Introduction Since the early 1970s, the poverty rate in the United States has increased despite massive efforts by federal and state governments to reduce it. Between 1970 and 1992, the percent of people in the United States having an income below the poverty level increased by more than 2 percentage points, from 12.6 percent to 14.5 percent. The percent of children below the poverty level increased by even more during the same time period, from 14.9 percent to 21.1 percent.(1) These patterns suggest that the United States has been fighting a losing battle in the war on poverty. While the poverty rate is lower than it was in 1960, it is still higher than it was during the 1970s. Overall, then, the United States can hardly claim that its anti-poverty programs have been effective in reducing the extent of poverty over the last quarter century. The literature that examines poverty relies, for the most part, on a comparison of descriptive statistics between regions or demographic groups. From a comparison of these descriptive statistics, researchers draw conclusions about which regions or which demographic groups tend to have a relatively high poverty rate. A serious weakness with this approach, though, is that it inherently suffers from a high degree of multi-collinearity. A researcher may find, for example, that families headed by a female (with no husband present) have relatively high poverty rates and conclude that being a member of a female-headed family therefore substantially increases one's likelihood of being in poverty. If, in fact, female heads of household tend to be less educated than male heads, and are less likely than male heads to have a manufacturing job, it could be that these characteristics, and not being a female head, per se, are what contributes to a higher poverty rate. A simple comparison of the descriptive statistics would not reveal this fact; it would simply indicate that female-headed families have a higher poverty rate. The use of cross-sectional regression analysis obviates those deficiencies. Regression analysis allows each characteristic's contribution to the poverty rate to be determined separately. This paper corrects this weakness of the literature by employing a multi-variate regression model of poverty. Another weakness of the literature is the lack of emphasis on the effect of institutionalized cultural characteristics on the poverty rate of a particular area. Certainly, there is no disagreement that the economic, demographic, and human capital characteristics of an area affect the area's poverty rate. Beyond that, however, the question as to whether or not the institutionalized cultural characteristics of an area also affect its poverty rate has been largely ignored in the literature.(2) If these institutionalized cultural characteristics significantly affect an area's poverty rate, it is important for economists, social scientists, and policy-makers to be aware of it. If institutionalized, cultural characteristics of an area do affect its poverty rate, the implication is that certain areas will likely be predisposed to having a relatively high (or relatively low) poverty rate, even if the area has economic, demographic, and human capital characteristics that would otherwise make it a candidate for having a relatively low (or relatively high) poverty rate. The purpose of this paper is to determine the specific effect that various economic, demographic, human capital, locational, and region-dependent cultural characteristics in a given geographic area have on the family poverty rate of the area. The primary focus of this paper is on the effect that region-dependent cultural characteristics that were established and institutionalized in the Antebellum South have on modern poverty rates in the South. To examine this issue, we determine the extent to which a county's family poverty rate in Georgia is affected by being located within Georgia's Plantation Belt, a region which was dependent on a plantation style, agricultural economy during the Antebellum period. …