Determinants of poverty in the US state of Virginia: an examination of the impact of rent (the neglected variable)

Abstract

ABSTRACT This study provides new insight into factors that influence the poverty rate by testing the following hypothesis: the percentage of the population in poverty is positively related to rent levels. Rent levels constitute an issue effectively overlooked in the poverty determinants literature. The present study estimates a panel data set inclusive of control variables for the US state of Virginia, which provided all the data needed for the analysis. Panel least squares (PLS) estimations using county fixed effects and period fixed effects for the period 2008–17 find poverty inversely related to median income and the percentage of the population with at least a high-school diploma. Poverty also is found to be positively related to the percentage of the population employed in mining; the percentage of the population classified as obese; and the unemployment rate. Finally, poverty in Virginia is, as hypothesized here, an increasing function of rent. Higher monthly rental levels on one-bedroom apartments increase the percentage of the population in poverty; indeed, a US$100 per month increase in rent would elevate the overall poverty rate in the state by 1.20–1.35%.