Meet the Author

Dionissi Aliprantis |

Research Economist

Dionissi Aliprantis

Dionissi Aliprantis is a research economist in the Research Department of the Federal Reserve Bank of Cleveland. He is primarily interested in applied econometrics, labor and urban economics, and education. His current work investigates neighborhood effects on education and labor market outcomes.

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Meet the Author

Nelson Oliver |

Research Analyst

Nelson Oliver

Nelson Oliver is a research analyst in the Research Department of the Federal Reserve Bank of Cleveland. His primary interests include urban revitalization, housing policy, and applied microeconomics.

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11.29.11

Economic Trends

Recent Trends in Neighborhood Poverty

Dionissi Aliprantis and Nelson Oliver

Recent data releases have focused attention on the increase in the share of individuals living in poverty since 2006. Since this increase in poverty has not only changed individuals’ economic circumstances, but also those of entire communities, researchers have been interested in understanding how those circumstances have varied across communities. One way to summarize the impact of the recent recession on communities is to examine neighborhood poverty rates.

We use data from the 2000 Census and from the 2005-2009 American Community Surveys (ACS) to examine recent trends in neighborhood poverty rates. The fraction of Americans living in more affluent neighborhoods (poverty rates of 10 percent or less) declined between 2000 and 2005-2009. Meanwhile, the share of Americans in neighborhoods with higher poverty rates (greater than 10 percent) grew during these years.

In terms of the magnitude of the changes during this period, the share of Americans living in the most well-to-do neighborhoods (less than 2.5 percent poverty rates) fell from 8.3 percent to 7.5 percent during this period. The share of Americans living in neighborhoods with poverty rates of 10 percent or higher grew by over 5 percent, and the share in high poverty neighborhoods (greater than 20 percent or greater than 40 percent) increased as well.

U.S. Population by Neighborhood Poverty Rate

Neighborhood poverty rate (percent)
Share of population (percent)
2000
2005-2009
2.5 or less
8.3
7.5
10 or greater
47.0
52.2
20 or greater
18.4
21.8
40 or greater
2.8
3.5

Sources: U.S. Census Bureau; NHGIS; ACS.

During this period, poverty patterns also shifted across the Fourth District of the Federal Reserve System, which includes Ohio, western Pennsylvania, eastern Kentucky, and the northern panhandle of West Virginia. The overall poverty rate in the Fourth District in 2000, 11.6 percent, was lower than the nation as a whole. But by 2005-2009, the Fourth District’s rate had surpassed the national rate, growing to 14.1 percent.

Comparing neighborhood poverty rates over this period, we see that the share of people living in neighborhoods with poverty rates of 10 percent or more increased 5.2 percentage points in the nation as a whole, and 10.8 percentage points in the Fourth District. This trend was also true for extreme-poverty neighborhoods; for example, the share of residents in neighborhoods with poverty rates of 40 percent or higher grew by 2.1 percentage points in the Fourth District, almost doubling.

Fourth District Population by Neighborhood Poverty Rate

Neighborhood poverty rate (percent)
Share of population (percent)
2000
2005-2009
2.5 or less
8.7
6.5
10 or greater
42.2
53.0
20 or greater
16.6
23.5
40 or greater
2.4
4.5

Sources: U.S. Census Bureau; NHGIS; ACS.

One possible explanation for the increase in the population in high-poverty neighborhoods would be a uniform increase in the poverty rate across all neighborhoods. In this case, geographic considerations would play little role in any policies aimed at decreasing the poverty rate.

However, the data show that the increase in overall poverty was not felt equally in all neighborhoods. We do not present details here, but the data indicate that the change in the poverty rates of the poorest neighborhoods was larger than the change for more affluent neighborhoods, both nationally and in the Fourth District. This pattern indicates that the process leading to individual-level poverty is connected to the process leading to neighborhood-level poverty. One implication is that an improved understanding of neighborhood poverty can help to improve poverty-related policies. Such a motivation will keep researchers and policymakers focused on neighborhood poverty as they seek to understand and respond to the recent recession.