The Impact of Governance on Poverty and Unemployment Control Before and After the Covid Outbreak in the United States

Abstract

Covid-19 presents many social and economic challenges and exacerbates existing ones. One of these challenges is global poverty. Prior to the epidemic, poverty affected the rural population traditionally. Global poverty can spread to urban areas now with COVID-19 outbreak. Poverty increased in the United States in 2020 as the coronavirus outbreak, affecting the economy and rising unemployment. New figures confirm that the recession may have widened the gap between rich and poor, with those at the bottom of the economic ladder suffering the most, such as the rural population. In this study, we examine the relationship between Covid outbreak, governance and economic performance and its impact on number in poverty. To this end, data from the Center for American Progress is analyzed over 10 years (from 2011–2020) among the 49 states in America through spatial econometric techniques for panel data. The effect of each state's condition was examined on neighboring states. The results showed that the governance index (with a negative sign) and Income inequality variable (with a positive sign), have the greatest impact on poverty. The unemployment, Gender wage gap, Hunger and food insecurity, Health insurance, Population and Higher education also have an impact on poverty. The policy recommendations of this study are that because the variable of governance (accountability and responsibility of the government to compensate for the damage caused by the covid outbreak) is one of the most effective variables to control poverty. JEL: I13, I18, I23, I28