is shown by the dashed line in Figure 5. This exercise shows that the actual poverty
rate is substantially higher than predicted by post-1980 labor market trends.
This set of calculations brings a different conundrum to the surface. If median
wage growth, rising inequality and the evolution of unemployment over the past
25 years do a good job of explaining changes in the poverty rate, then the rise in
women’s labor force participation suggests that poverty rates should have fallen by
more than they did, conditional on the evolution of the other labor market
variables. Of course, other factors may have also affected the poverty rate, including
demographic changes in family structure, antipoverty spending and immigration—
and we now turn to these factors.