POVERTY,PRICES, AND PLACE: HOW SENSITIVE IS THE SPATIAL DISTRIBUTION OF POVERTY TO COST OF LIVING ADJUSTMENTS?

This article examines how accounting for cost-of-living differences across metropolitan and nonmetropolitan areas affects measured rates of poverty. The spatial price index used is based on the Fair Market Rent data and was developed by the Census Bureau for use in its experimental poverty research program. Following U.S. federal definitions, poverty in nonmetro areas has been consistently higher than it has been in metro areas. Using the Fair Market Rent index to adjust for differences in cost of living results in a complete reversal of nonmetro-metro rankings in terms of prevalence, depth, and severity of poverty for every year examined (1991 to 2002). (JEL I32 , R1 , C81 )