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The Time Lag In Annual Household-Based Income Measures: Assessing And Correcting The Bias

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  • Annelies Debels
  • Leen Vandecasteele
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    Abstract

    Annual income data are typically provided with a time lag. This article reviews several ways of dealing with this time lag in the construction of annual household-based income measures for individual economic well-being. It also proposes an alternative method that yields better estimates for equivalized household income, especially in the case of household composition change. Next, the two most commonly applied income measures are compared to this alternative measure with empirical income data from the European Community Household Panel. This comparison reveals that ignoring the time lag and household changes leads to substantial bias in income and poverty estimates and to erroneous conclusions about the determinants of poverty entry. The evidence in this article will be useful to researchers who want to make a well-informed choice between different annual income measures. Copyright 2008 The Authors.

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    Bibliographic Info

    Article provided by International Association for Research in Income and Wealth in its journal Review of Income and Wealth.

    Volume (Year): 54 (2008)
    Issue (Month): 1 (03)
    Pages: 71-88

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    Handle: RePEc:bla:revinw:v:54:y:2008:i:1:p:71-88

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    Cited by:
    1. Katja Landau & Stephan Klasen & Walter Zucchini, 2012. "Measuring Vulnerability to Poverty Using Long-Term Panel Data," SOEPpapers on Multidisciplinary Panel Data Research 481, DIW Berlin, The German Socio-Economic Panel (SOEP).
    2. Olga Cantó & Carlos Gradín & Coral Del Río, 2012. "Pobreza Crónica, Transitoria Y Recurrente En España," Revista de Economia Aplicada, Universidad de Zaragoza, Departamento de Estructura Economica y Economia Publica, vol. 20(1), pages 69-94, Spring.
    3. Eirini Andriopoulou & Panagiotis Tsakloglou, . "The determinants of poverty transitions in Europe and the role of duration dependence," DEOS Working Papers 1121, Athens University of Economics and Business.
    4. José Arranz & Olga Cantó, 2012. "Measuring the effect of spell recurrence on poverty dynamics—evidence from Spain," Journal of Economic Inequality, Springer, vol. 10(2), pages 191-217, June.
    5. Sara Ayllón, 2013. "Understanding poverty persistence in Spain," SERIEs, Spanish Economic Association, vol. 4(2), pages 201-233, June.

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