AN ECONOMIC ANALYSIS OF THE RELATIONSHIP OF POVERTY AND INCOME INEQUALITY IN RURAL WEST VIRGINIA

Abstract

Ordinary and two-stage least square regressions were used to examine the major determinants of poverty and income inequality with cross-sectional data of 38 rural counties of West Virginia. The empirical findings confirm the possibility of simultaneity between poverty and income inequality and poverty level is the main determinant of increased levels of income inequality. The proportions of population in welfare, population of age 65 or older, female-headed households, people unemployed, and the level of inequality contributed to increased poverty levels. The proportion of employment shares in finance, insurance and real estate, and per capita income contributed to reduced poverty levels. But, per capita income, the proportion of human capital stock, and the proportion of employment shares in manufacturing contributed to reduced income inequality.Food Security and Poverty,