IDEAS home Printed from https://ideas.repec.org/p/ehl/lserod/6310.html
   My bibliography  Save this paper

Income dynamics and the life cycle

Author

Listed:
  • Rigg, John A.
  • Sefton, Tom

Abstract

This paper argues that our understanding of income and poverty dynamics benefits from taking a life cycle perspective. A person¿s age and family circumstances ¿ the factors that shape their life cycle ¿ affect the likelihood of experiencing key life events, such as partnership formation, having children, or retirement; this in turn affects their probability of experiencing rising, falling, or other income trajectories. Using ten waves of the British Household Panel Survey, we analyse the income trajectories of people at different stages in their lives in order to build a picture of income dynamics over the whole life cycle. We find that particular life events are closely associated with either rising or falling trajectories, but that there is considerable heterogeneity in income trajectories following these different events. Typically, individuals experiencing one of these life events are around twice as likely to experience a particular income trajectory, but most individuals will not follow the trajectory most commonly associated with that life event. This work improves our understanding of the financial impact of different life events and provides an indication of how effectively the welfare state cushions people against the potentially adverse impact of certain events.

Suggested Citation

  • Rigg, John A. & Sefton, Tom, 2004. "Income dynamics and the life cycle," LSE Research Online Documents on Economics 6310, London School of Economics and Political Science, LSE Library.
  • Handle: RePEc:ehl:lserod:6310
    as

    Download full text from publisher

    File URL: http://eprints.lse.ac.uk/6310/
    File Function: Open access version.
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. P. Jenkins, Stephen & A. Rigg, John, 2003. "Disability and disadvantage: selection, onset, and duration effects," ISER Working Paper Series 2003-18, Institute for Social and Economic Research.
    2. Burgess, Simon & Gardiner, Karen & Propper, Carol, 2001. "Growing up: school, family and area influences on adolescents' later life chances," LSE Research Online Documents on Economics 6432, London School of Economics and Political Science, LSE Library.
    3. Burgess, Simon & Gardiner, Karen & Jenkins, Stephen & Propper, Carol, 2000. "Measuring income risk," LSE Research Online Documents on Economics 51327, London School of Economics and Political Science, LSE Library.
    4. Burgess, Simon & Gardiner, Karen & Propper, Carol, 2001. "Growing up: school, family and area influences on adolescents' later life chances," LSE Research Online Documents on Economics 6432, London School of Economics and Political Science, LSE Library.
    5. Sarah Jarvis & Stephen P. Jenkins, 1997. "Low income dynamics in 1990s Britain," Fiscal Studies, Institute for Fiscal Studies, vol. 18(2), pages 123-142, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sara Ayllón, 2015. "Youth Poverty, Employment, and Leaving the Parental Home in Europe," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 61(4), pages 651-676, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. John A. Rigg & Tom Sefton, 2004. "Income Dynamics and the Life Cycle," CASE Papers 081, Centre for Analysis of Social Exclusion, LSE.
    2. Brooke Sykes & Sako Musterd, 2011. "Examining Neighbourhood and School Effects Simultaneously," Urban Studies, Urban Studies Journal Limited, vol. 48(7), pages 1307-1331, May.
    3. Gundi Knies & Patricia C Melo & Min Zhang, 2021. "Neighbourhood deprivation, life satisfaction and earnings: Comparative analyses of neighbourhood effects at bespoke scales," Urban Studies, Urban Studies Journal Limited, vol. 58(13), pages 2640-2659, October.
    4. Glen Bramley & David Watkins & Noah Kofi Karley, 2011. "An Outcome-Based Resource Allocation Model for Local Education Services in Wales," Environment and Planning C, , vol. 29(5), pages 848-871, October.
    5. Alasdair Rae, 2009. "Isolated Entities or Integrated Neighbourhoods? An Alternative View of the Measurement of Deprivation," Urban Studies, Urban Studies Journal Limited, vol. 46(9), pages 1859-1878, August.
    6. Deborah A. Cobb-Clark & Sonja C. Kassenboehmer & Trinh Le & Duncan McVicar & Rong Zhang, 2015. "‘High’-School: The Relationship between Early Marijuana Use and Educational Outcomes," The Economic Record, The Economic Society of Australia, vol. 91(293), pages 247-266, June.
    7. Margarida Chagas Lopes & Pedro Goulart, 2003. "Portuguese data on child work: what does it encompass?," Working Papers Department of Economics 2003/04, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
    8. Chagas Lopes, Margarida & Medeiros, João & PINTO, AQUILES, 2005. "Does School Improve Equity? Some Key Findings from Portuguese Data," MPRA Paper 26762, University Library of Munich, Germany.
    9. Mark Kleinman, 1998. "Include Me Out? The New Politics of Place and Poverty (published in "Policy Studies", 21:1, April 2000)," CASE Papers case11, Centre for Analysis of Social Exclusion, LSE.
    10. Francesco Devicienti & Valentina Gualtieri & Mariacristina Rossi, 2014. "The Persistence Of Income Poverty And Lifestyle Deprivation: Evidence From Italy," Bulletin of Economic Research, Wiley Blackwell, vol. 66(3), pages 246-278, July.
    11. Duclos, Jean-Yves & Araar, Abdelkrim & Giles, John, 2010. "Chronic and transient poverty: Measurement and estimation, with evidence from China," Journal of Development Economics, Elsevier, vol. 91(2), pages 266-277, March.
    12. Lucinda Platt, 2006. "Assessing the impact of illness, caring and ethnicity on social activity," CASE Papers case108, Centre for Analysis of Social Exclusion, LSE.
    13. Iryna Kyzyma, 2014. "Changes in the Patterns of Poverty Duration in Germany, 1992–2009," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 60(S2), pages 305-331, November.
    14. Tania Burchardt, 2003. "Being and becoming: Social exclusion and the onset of disability," CASE Reports casereport21, Centre for Analysis of Social Exclusion, LSE.
    15. Rohde, Nicholas & Tang, Kam Ki & D’Ambrosio, Conchita & Osberg, Lars & Rao, Prasada, 2020. "Welfare-based income insecurity in the us and germany: evidence from harmonized panel data," Journal of Economic Behavior & Organization, Elsevier, vol. 176(C), pages 226-243.
    16. James Banks & Richard Blundell & James Smith, 2000. "Wealth inequality in the United States and Great Britain," IFS Working Papers W00/20, Institute for Fiscal Studies.
    17. Sonia Bhalotra, 2001. "Growth and welfare provisioning: lessons from the English Poor Laws?," Journal of International Development, John Wiley & Sons, Ltd., vol. 13(7), pages 1083-1096.
    18. Morissette, Rene & Ostrovsky, Yuri, 2005. "Summary Of: The Instability of Family Earnings and Family Income in Canada, 1986 to 1991 and 1996 to 2001," Analytical Studies Branch Research Paper Series 2005266e, Statistics Canada, Analytical Studies Branch.
    19. James Banks & Richard Blundell & James P. Smith, 2003. "Understanding Differences in Household Financial Wealth between the United States and Great Britain," Journal of Human Resources, University of Wisconsin Press, vol. 38(2).
    20. Luc Arrondel & Hector Calvo Pardo & Xisco Oliver, 2010. "Temperance in Stock Market Participation: Evidence from France," Economica, London School of Economics and Political Science, vol. 77(306), pages 314-333, April.

    More about this item

    Keywords

    income dynamics; life cycle; poverty;
    All these keywords.

    JEL classification:

    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ehl:lserod:6310. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: LSERO Manager (email available below). General contact details of provider: https://edirc.repec.org/data/lsepsuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.