This paper examines the dynamics of poverty. Previous analyses have examined either fluctuations in the male heads' eamings or the frequency of poverty periods over a fixed time frame. Our approach depends on a definition of spells of poverty. Using this methodology we find that the majority of poor persons at any time are in the midst of a rather long spell of poverty. The methodology also allows us to estimate that less than 40 percent of poverty spells begin because of a drop in the heads' eamings, while 60 percent of the spells end when the heads' eamings increase. Thus, researchers must focus on household formation decisions and on the behavior of secondary family members.There has beeti a dramatic resurgence recently of discussion of the "underclass." The discussion is retniniscent of debates about poverty during the 1960s, when the notions of a "culture of poverty," particularly as popularized by Michael Harrington's Other America (1962), dominated both intellectual and policy thinking.The idea of an underclass seems inconsistent, however, with much of the research on the dynamics of poverty during the 1970s. That research, using new longitudinal data, seemed to show that the bulk of the poor were poor for only a few years. The research also showed that the poor were a very heterogeneous group, including a small minority of persistently poor.The persistence of poverty is of interest both for understanding the phenomenon and for developing policy. Claims about dependency and separate life styles among the poor rest on assumptions about the long-term nature of poverty. Questions

This article examines the impact of the recent dramatic changes in the social policies, particularly the expansion of the EITC and Welfare reform on labor supply, marriage, and cohabitation. Altered policies have increased incentives to work or marry for some, diminished incentives for others. The results strongly indicate expanded work by single mothers and reductions of work by married mothers in accordance with their changed incentives. By contrast, estimated impacts on marriage are small and ambiguous, though modest changes in cohabitation in the predicted direction suggest that impact on family structure might become more apparent in the future.

The author is extremely grateful to Eric Seller for many very helpful suggestions and for his help in the preliminary analysis. Eric Schlaikjer provided outstanding research assistance. I would also like to thank Richard Freeman and John Kain. This research project was funded in part by the Rockfeller Foundation and by the U. rates of unemployment among black youth can be linked to a geographic mismatch between the residences of black youth and the jobs they might occupy. Chicago's labor market is examined in detail. The paper reports that black youth do in fact seem to live further from jobs than white youth do. However, the differences are not great enough to generate large differences in employment rates unless geographic search costs are very high. To explore the possible impact the differences really do have, a wide variety of models are examined and estimated. These models uniformly reject the hypothesis that a geographic mismatch is a major cause for black-white differences. Blacks who live near large concentrations of jobs seem to fair only slightly better than those who live far from such concentrations. And in areas where whites and blacks live in close geographic proximity, the racial employment differences remain very large.

and Lindsay Speros provided excellent research assistance. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peerreviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.