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An economic model of household income dynamics, with an application to poverty dynamics among American women

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  • Simon Burgess
  • Carol Propper

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 emphasises 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. We illustrate this framework with an application to poverty rates among young women in the US. We use this model to analyse differences in poverty experiences, particularly between black and white women.

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File URL: http://eprints.lse.ac.uk/6525/
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Bibliographic Info

Paper provided by London School of Economics and Political Science, LSE Library in its series LSE Research Online Documents on Economics with number 6525.

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Length: 82 pages
Date of creation: Jul 1998
Date of revision:
Handle: RePEc:ehl:lserod:6525

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Keywords: Poverty analysis; household income dynamics;

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Cited by:
  1. Ambra Poggi, 2003. "Does persistence of social exclusion exist in Spain?," Working Papers wpdea0308, Department of Applied Economics at Universitat Autonoma of Barcelona.
  2. 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.
  3. repec:ese:iserwp:2005-26 is not listed on IDEAS
  4. Francesco Devicienti, 2001. "Estimating Poverty Persistence in Britain," LABORatorio R. Revelli Working Papers Series 1, LABORatorio R. Revelli, Centre for Employment Studies.
  5. Stephanie Riegg Cellini & Signe-Mary McKernan & Caroline Ratcliffe, 2008. "The dynamics of poverty in the United States: A review of data, methods, and findings," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 27(3), pages 577-605.
  6. Martin Biewen, 2009. "Measuring state dependence in individual poverty histories when there is feedback to employment status and household composition," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 24(7), pages 1095-1116.
  7. Martin Biewen, 2004. "Measuring State Dependence in Individual Poverty Status: Are there Feedback Effects to Employment Decisions and Household Composition?," Discussion Papers of DIW Berlin 429, DIW Berlin, German Institute for Economic Research.
  8. Coral del Río & Carlos Gradín & Olga Cantó, 2006. "What helps households with children in leaving poverty? Evidence from Spain," Working Papers 24, ECINEQ, Society for the Study of Economic Inequality.
  9. 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," LSE Research Online Documents on Economics 6243, London School of Economics and Political Science, LSE Library.
  10. repec:bri:uobdis:03/543 is not listed on IDEAS
  11. Francesco Devicienti, 2002. "Poverty persistence in Britain: A multivariate analysis using the BHPS, 1991–1997," Journal of Economics, Springer, vol. 77(1), pages 307-340, December.
  12. repec:ese:iserwp:2001-02 is not listed on IDEAS
  13. Pérez-Mayo, Jesús, 2004. "Consistent poverty dynamics in Spain," IRISS Working Paper Series 2004-09, IRISS at CEPS/INSTEAD.
  14. Bigsten, Arne & Shimeles, Abebe, 2004. "Dynamics of Poverty in Ethiopia," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  15. FUSCO Alessio & ISLAM Nizamul, 2012. "Understanding the drivers of low income transitions in Luxembourg," CEPS/INSTEAD Working Paper Series 2012-31, CEPS/INSTEAD.

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