Working Paper: NBER ID: w1199
Authors: Mary Jo Bane; David T. Ellwood
Abstract: This paper examines the dynamics of poverty. Previous analyses of the dynamics of poverty have either examined only fluctuations in the male heads earnings or looked at the frequency of poverty periods over a fixed time frame. We argue that a more appropriate way to understand the dynamics of poverty is to define spells of poverty. Using this methodology we find that the majority of poor persons at any point in time are in fact in the midst of a rather long spell of poverty. The methodology also allows us to estimate the extent to which poverty spell beginnings and endings are associated with changes in income or changes in family structure. Less than 40 percent of poverty spell beginnings seem to be caused by a drop in the heads earnings,while 60 percent of endings occur when the head's earnings increase. As a result we argue that to understand the causes and potential remedies for poverty, researchers must focus on household formation decisions and on the behavior of so called secondary family members.
Keywords: poverty; dynamics; family structure; income changes
JEL Codes: I32
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| drop in head's earnings (E25) | poverty spell beginning (I32) |
| increase in head's earnings (J31) | poverty spell ending (I32) |
| family structure changes (J12) | poverty dynamics (I32) |
| duration of poverty spells (C41) | overall poverty population (I32) |