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On the Definition and Measurement of Chronic Poverty

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Author Info
Rolf Aaberge ()
Magne Mogstad

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Abstract

As an alternative to the conventional methods for measuring chronic poverty, this paper proposes to use an interpersonal comparable measure of permanent income as a basis for defining and measuring chronic poverty. This approach accounts for the fact that individuals may undertake inter-period income transfers if it is to their advantage. Moreover, it allows for individual-specific interest rates on borrowing and saving as well as for the presence of liquidity constraints. Due to its general nature the proposed method proves useful for evaluating the theoretical basis of the standard methods for measuring chronic poverty.

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Publisher Info
Paper provided by ICER - International Centre for Economic Research in its series ICER Working Papers with number 36-2006.

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Length: 22 pages
Date of creation: Jul 2006
Date of revision:
Handle: RePEc:icr:wpicer:36-2006

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Related research
Keywords: Intertemporal choice; liquidity constraints; permanent income; chronic poverty.;

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Find related papers by JEL classification:
D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
D91 - Microeconomics - - Intertemporal Choice and Growth - - - Intertemporal Consumer Choice; Life Cycle Models and Saving
I32 - Health, Education, and Welfare - - Welfare and Poverty - - - Measurement and Analysis of Poverty

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    Other versions:
  8. Browning, M. & Crossley, T., 1999. "Shocks, Stocks and Socks: Consumption Smoothing and the Replacement of Durables During an Unemployment Spell," ANUCBE School of Economics Working Papers 1999-376, Australian National University, College of Business and Economics, School of Economics. [Downloadable!]
    Other versions:
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  11. Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June. [Downloadable!] (restricted)
  12. Stevens, Ann Huff, 1994. "The Dynamics of Poverty Spells: Updating Bane and Ellwood," American Economic Review, American Economic Association, vol. 84(2), pages 34-37, May. [Downloadable!] (restricted)
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    Other versions:
  14. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September. [Downloadable!] (restricted)
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    Other versions:
  16. Martin Browning & Thomas F. Crossley, 2001. "The Life-Cycle Model of Consumption and Saving," Journal of Economic Perspectives, American Economic Association, vol. 15(3), pages 3-22, Summer. [Downloadable!] (restricted)
    Other versions:
  17. Flavin, Marjorie A, 1981. "The Adjustment of Consumption to Changing Expectations about Future Income," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 974-1009, October. [Downloadable!] (restricted)
  18. Robert G. Valletta, 2006. "THE INS AND OUTS OF POVERTY IN ADVANCED ECONOMIES:
    GOVERNMENT POLICY AND POVERTY DYNAMICS IN CANADA, GERMANY, GREAT BRITAIN, AND THE UNITED STATES    ," Review of Income and Wealth, Blackwell Publishing, vol. 52(2), pages 261-284, 06. [Downloadable!] (restricted)
  19. Slesnick, Daniel T, 1993. "Gaining Ground: Poverty in the Postwar United States," Journal of Political Economy, University of Chicago Press, vol. 101(1), pages 1-38, February. [Downloadable!] (restricted)
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