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An Economic Model of Household Income Dynamics, with an Application to Poverty Dynamics among American Women

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Burgess, Simon
Propper, Carol

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Abstract

The rise in inequality and poverty is one of the most important economic and social issues in recent times. But in contrast to the literature on individual earnings inequality, there has been little work modelling (as opposed to documenting) household income dynamics. This is largely because of the difficulties created by the fact that on top of the human capital issues that arise in personal earnings, individuals are continually forming, dissolving and reforming household units. This paper proposes a framework for modelling household income dynamics. It emphasizes the role of household formation and dissolution and labour market participation. It allows standard economic theory to address the issues of household, as distinct from individual, income and poverty dynamics. In this paper, we illustrate this framework with an application to poverty rates among young women in the United States. We use this model to analyse differences in poverty experiences, particularly between black and white women.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 1830.

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Date of creation: Mar 1998
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Handle: RePEc:cpr:ceprdp:1830

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Related research
Keywords: household income dynamics; poverty analysis;

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Find related papers by JEL classification:
D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
I32 - Health, Education, and Welfare - - Welfare and Poverty - - - Measurement and Analysis of Poverty

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  1. Biewen, Martin, 2004. "Measuring State Dependence in Individual Poverty Status: Are There Feedback Effects to Employment Decisions and Household Composition?," IZA Discussion Papers 1138, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  2. Simon Burgess & Carol Propper & Matt Dickson, 2003. "The Analysis of Poverty Data with Endogenous Transitions," Bristol Economics Discussion Papers 03/543, Department of Economics, University of Bristol, UK. [Downloadable!]
    Other versions:
  3. Pérez-Mayo, Jesús, 2004. "Consistent poverty dynamics in Spain," IRISS Working Paper Series 2004-09, IRISS at CEPS/INSTEAD. [Downloadable!]
  4. repec:ese:iserwp: is not listed on IDEAS
  5. Bigsten, Arne & Shimeles, Abebe, 2004. "Dynamics of Poverty in Ethiopia," Working Papers UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER). [Downloadable!]
  6. Francesco Devicienti, 2001. "Estimating Poverty Persistence in Britain," 10th International Conference on Panel Data, Berlin, July 5-6, 2002 B2-3, International Conferences on Panel Data. [Downloadable!]
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  7. Francesco Devicienti, 2002. "Poverty persistence in Britain: A multivariate analysis using the BHPS, 1991–1997," Journal of Economics, Springer, vol. 9(1), pages 307-340, December. [Downloadable!] (restricted)
  8. Arnstein Aassve & Simon Burgess & Matt Dickson & Carol Propper, 2006. "Modelling poverty by not modelling poverty: An application of a simultaneous hazards approach to the UK," CASE Papers /106, Centre for Analysis of Social Exclusion, LSE. [Downloadable!]
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  9. Pérez-Mayo, Jesús, 2009. "Un análisis dinámico de la privación en España /A Dynamic Analysis of Deprivation for Spain," Estudios de Economía Aplicada, Estudios de Economía Aplicada, vol. 27, pages 501-522, Agosto. [Downloadable!] (restricted)
  10. Ambra Poggi, 2007. "Does persistence of social exclusion exist in Spain?," Journal of Economic Inequality, Springer, vol. 5(1), pages 53-72, April. [Downloadable!] (restricted)
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