Slipping into and out of Poverty: The Dynamics of Spells

This paper examines the dynamics of poverty. Previous analyses have examined either fluctuations in the male heads' earnings or the frequency of poverty periods over a fixed time frame. Our approach depends on a definition of spells of poverty. Using this methodology we find that the majority of poor persons at any time are in the midst of a rather long spell of poverty. The methodology also allows us to estimate that less than 40 percent of poverty spells begin because of a drop in the heads' earnings, while 60 percent of the spells end when the heads' earnings increase. Thus, researchers must focus on household formation decisions and on the behavior of secondary family members.