Does Economic Vulnerability Depend on Place of Residence? Asset Poverty across Metropolitan and Nonmetropolitan Areas

This paper uses PSID data for 1989, 1994, and 1999 to examine why some U.S. households are asset poor, i.e., why households have insufficient resources to invest in their future or to sustain household members at a basic level during times of economic disruption. The study contributes to an improved understanding of asset poverty's correlates by examining the influence of place of residence; the extant literature has focused on individual-level explanations. We estimate a random-effects logistic model of the probability that an individual is asset poor at a given point in time as a function of household (e.g. gender and race of the head; family structure) and place (region and metropolitan or nonmetropolitan county) variables. The central finding of the paper is that place of residence is an important determinant of asset poverty, above and beyond the influence of household characteristics. We find that living in a central metropolitan county and in a nonmetropolitan area is associated with a higher risk of being asset poor, all else being equal.