A consistent finding in the poverty literature is the diminution of the impact of the macroeconomy on official poverty rates in the United States since the early 1980s. Up until then, measures of aggregate economic activity (real GDP growth or the unemployment rate) had a more substantial influence on the poverty rate. Most recently, this fact has been documented by Hilary W. Hoynes, Marianne E. Page, and Ann Huff Stevens (2006, HPS hereafter). Kevin Lang (2007) notes that much has changed since the early 1980s with respect to antipoverty policy and labor market factors that affect poverty status. Important changes include the transition from cash to in-kind transfers, the stagnation in real median earnings, rising earnings inequality, and the increase in female-headed households. Nevertheless, after considering several factors that influence poverty, including wage growth, inequality, and female employment, HPS conclude their analysis of poverty trends with the view that explanation of the change in the response of poverty to macroeconomic indicators remains an open issue. This paper examines whether traction may be gained on this issue by enhancing our understanding of the volatility of poverty rates. Specifically, we examine the volatility of poverty rates over time and across demographic groups. To the extent that poverty rate variability is associated with the risk of poverty incidence, it is shown that certain eras have exposed members of particular demographic groups to more poverty risk than others. Then, we contrast the volatility of poverty rates to that of aggregate economic activity. Margaret M. McConnell and Gabriel Perez-Quiros (2000), among others, present evidence that the volatility of real GDP has been significantly Poverty Volatility and Macroeconomic Quiescence

This paper examines the empirical relationship between relative educational unemployment rates and monetary policy. Such an examination is warranted because policymakers’ attempts to understand the distributional effects of monetary policy may be confounded by vintages of the theoretical literature that offer contrasting views of how skill-based relative unemployment (with unemployment of the less skilled in the numerator) might behave over the business cycle. A traditional view emphasizes characteristics of labor markets that could induce countercyclical movements in skill-based relative unemployment. For example, Arthur Okun (1973) argues that an important benefit of high levels of aggregate economic activity is that opportunities for employment in the high-quality jobs sector open up to the relatively unskilled. A mechanism for the relative improvement of the employment prospects of the unskilled is changes in hiring standards of high-quality job providers that occur over the cycle. Changes that occur during expansion and boom periods mentioned by Okun include accepting younger and less experienced workers or workers without diplomas and more intensive screening of applicants. A forceful statement of this highpressure economy view is contained in Rebecca Blank (2000). A more recent view of the impact of technological adoption could have quite different implications for movements in skill-based relative unemployment over the cycle. For example, Dale Mortensen and Christopher Pissarides (1999) show that, in their equilibrium search and matching framework, the relationship between skill and unemployment is convex in the presence of labor-market policies such as unemployment compensation. In this environment, skill-biased technology shocks increase overall unemployment rates with a disproportionate share of the unemployment falling on the unskilled. In his popular account of the matter, Krueger (2002) ties cyclical investment in new technologies to the conduct of monetary policy, thereby linking relative educational unemployment to monetary policy. My answer to the title question emerges from quantitative results designed to assess the dynamic effect on relative educational unemployment of a monetary policy surprise, controlling for supply shocks and the introduction of new technical ideas. These findings appear to resolve some of the tension between alternative views on relative unemployment dynamics in favor of the high-pressure economy hypothesis. † Discussants: Seth B. Carpenter, Federal Reserve Board; Jonah B. Gelbach, University of Maryland; Bridget Terry Long, Harvard University.